The Managerial Revolution

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** I come now to the last bran^h of my charge ; that I
teach princes villainy, and how to enslave. If any
man will read over my book . . . with impartiality and
ordinary charity, he will easily perceive that it is not
my intention to recommend that government, or those
men there described, to the world, much less to teach
men how to trample upon good men, and all that is
sacred and venerable upon earth, laws, religion, honesty,
and what not. If I have been a little too punctual in
describing these monsters in all their lineaments and
colours, I hope mankind will know them, the better to
avoid them, my treatise being both a satire against them,
and a true character of them . .

Niccolo Machxavelu,
from a Letter to a Friend

THE

MANAGERIAL

REVOLUTION

WHAT IS HAPPENING
IN THE WORLD NOW

BY

JAMES BURNHAM

PUTNAM AND COMPANY. LIMITED
4S OfCAt; RtiiieU Street. London, W.G.i

First published tn England, May, ig43
Copyright U.S.A. ig 4 i
Reprinted .... March, ig43
Reprinted . . . February, 1^44

Pfimei *n Gmt Snimn br Wymen ^ Sens UmUsd Undots^ XseUnt m4 Fnktnhm

CONTENTS

CBAPTXll PAOB

I. THE PROBLEM 3

n. THE WORLD WE LIVED IN 9

in. THE THEORY OF THE PERMANENCE OF CAPITALISM - 28

rV. THE THEORY OF THE PROLETARIAN SOCIALIST

REVOLUTION 36

V. THE STRUGGLE FOR POWER 55

VI. THE THEORY OF THE MANAGERIAL REVOLUTION - 68

Vn. WHO ARE THE MANAGERS? ----- 73

Vni. THE MANAGERS MOVE TOWARD SOCIAL DOMINANCE - 9I

DC. THE ECONOMY OF MANAGERIAL SOCIETY - - I06

X. THE BIANAGERS SHIFT THE LOCUS OF SOVEREIGNTY - 1 32

XI. TOTALITARIANISM AND MANAGERIAL SOCIETY- - 1 45

Xn. THE WORLD POLICY OF THE MANAGERS - - 1 64

Xm. THE MANAGERIAL IDEOLOGIES ^ - - * ^75

XTV. THE RUSSIAN WAY I95

XV. THE GERMAN WAY 214

XVI. THE FUTURE OF THE tnOTED STATB 3 ... 238

XVn* OBJECTIONS 259

1

I

THE PROBLEM

During the course of the second world war, which
began on September i, 1939, growing numbers of persons
came to the conclusion that this war could not be adequately
understood in the usual military and diplomatic terms. Of
course, each participant in every big war is careful to explain
that it fights, not for any vulgar purpose of mere conquest,
but for liberty, justice, God, and the future of mankind.
The second world war is no exception to this general rule
which seems to express a deep need of men’s moral nature
when confronted with the task of mutual slaughter. Never-
theless, with all allowances for the general rule, there still
remains, on the part of trained and intelligent as well as
casual observers, the conviction that this war is not an
ordinary war.

The difference has been stated by some in calling the war
a “ revolution ” ; more particularly, a “ social revolution.”
For example, the well-known American ■writer, Qpincy Howe,
in his radio commentaries insisted time after time on such an
interpretation. Germany, he kept repeating, is not merely
sending a remarkably organized military machine across its
borders. Her military machine is the carrier of a social
revolution which is transforming the social system on the
European continent. The same point was made in numerous
dispatches from Otto Tolischus after his expulsion from Geiv
many, where he had been stationed for many years as chief
correspondent of tihe New York Tims. I mention these two
men not because their opinion was exceptional, but rather
because they conspicuously and consistently upheld a view
which has come to be shared by so many others.

3

THE MANAGERIAL REVOLUTION

However, when we examine what such observers have said
and written, we discover that, though they have been firm
in their insistence that the second world war is a social revo-
lution, they have been by no means clear in describing what
kind of revolution it is, what it consists of, where it is leading,
what type of society will emerge from it.

We must be careful not to permit historical judgment to
be distorted by the staggering emotional impact of the war
itself. If a major social revolution is now in fact occurring,
the war is subordinate to the revolution, not the other way
around. The war in the final analysis — and future wars —
is an episode in the revolution. We cannot understand the
revolution by restricting our analysis to the war ; we must
understand the war as a phase in the development of the
revolution.

Moreover, the role of Germany in the revolution, if it is a
revolution, should not be exaggerated. The modern world is
interlocked by myriad technological, economic, and cultural
chains. The social forces which have been dramatically
operative within Germany have not stopped at the Reich’s
national boundaries. If they came to so startling a head in
Germany, this does not mean that they have not been driving
steadily beneath the surface — and not so far beneath — in
other nations, in all other nations for that matter. For us
who live in the United States, it is the United States that
is our most natural first interest. The outworn fallacies of
the belief in the military isolation of the United States fi*om
the rest of the world are not one-tenth so grave as the fallacies
of the belief in our social isolation.

0 0 0 0 0

It is by no means obvious what we mean when we speak
of a ** social revolution,” especially when wc try to dis-
tinguish a social revolution from a merely military ” or

political ” revolution. Several conflicting definitions have
been attempted, as a rule accompanying special and con-
flicting theories of history, of which the definitions are a part.
It seems, however, possible to describe the chief constitumts

4

THE PROBLEM

of what can intelligibly be meant by a “ social revolution ”
without committing ourselves in advance to any special
theory. These chief constituents seem to be three :

1. There takes place a drastic change in the most im-

portant social (economic and political) institutions. The
system of property relations, the forms under which economic
production is carried on, the legal structure, the type of
political organization and regime, arc all so sharply altered
that we feel compelled to call them different in kind, not
merely modified in degree. Medieval (feudal) property
relations, modes of economic production, law, political organi-
zation are all replaced by modern (bourgeois or capitalist)
property relations, modes of production, law, and political
organization. During the course of the revolution it often
happens that the old institutions are quite literally smashed
to pieces, with new institutions developing to perform analo-
gous functions in the new society. ?

2. Along with the changes in social institutions there go
more or less parallel changes in cultural institutions and in
the dominant beliefs which men hold about man’s place in
the world and the universe. This cultural shift is plainly
seen in the transition from feudal to modern capitalist society,
both in the reorganization of the form and place of such
institutions as the Church and the schools, and in the com-
plete alteration of the general view of the world, of life, and
of man which took place during the Renaissance.

3. Finally, we observe a change in the group of men
which holds the top positions, which controls the greater
part of power arid privilege in society. To the social domin-
ance of feudal lords, with their vassals and fiefs, succeeds the
social dominance of industrialists and bankers, with their
monetary wealth, their factories and wage-workers.

In this conception there is a certain arbitrariness. The
fact is that social and cultural institutions, beliefs, and
relationships of social power always change, are subject to
a continuous modification. It is impossible to draw an
exact temporal line dividing one type of society from another.
What is importani is not so much the fact of change, which

5

THE MANAGERIAL REVOLUTION

is always present in history, as the rate of change. In some
periods the rate of social change is far more rapid than in
others. Whatever one’s professed theory of history, it can
hardly be denied that the rate of change of social institutions,
beliefs, and relative power of various social groups was in-
comparably higher in, say, the two centuries from 1400 to
1600 than in the six centuries preceding 1400 ; that, indeed,
there was a much greater total change in those two centuries
than there had been during the rix centuries from 800 to
1400. What we seem to mean by a social revolution is
identical with such a period of maximum rate of change.
We all recognize the society that prevailed before such a
period as a different type &om that which is consolidated
after it. Historians differ widely about when the “ modern
era ” began, but they all unite in making a sharp distinction
between medieval and modern society.

To say that a social revolution is occurring at the present
time is, then, equivalent to saying that the present is a period
characterized by a very rapid rate of social change, that it
is a period of transition from one type of society — that type
which has prevailed from, roughly, the fifteenth century to
the early part of the twentieth — to a new and different type
of society. For centuries, men’s activities are worked out
within a given, more or less stable, framework of social and
cultural institutions ; changes take place, but not to such an
extent as to alter the basic framework. Occasionally, in
human history, the changes take place so rapidly and are so
drastic in extent that the framework itself is shattered and
a new one takes its place.

*****

The problem of this book is as follows : I am going to
assiune the general conception of a social revolution which
I have just briefly stated. I am going to assume further
(though not without evidence to back up this assumption)
that the present is in fact a period of social revolution, of
trai^ition from 'one type of society to another. With the
help of these assumptions, I shall present a theory— which 1

6

TH£ PROBLEM

call “ the theory of the managerial revolution ’’ — which is
able to explain this transition and to predict the type of
society in which the transition will eventuate. To present
this theory is the problem, and the only problem, of this book.

I do not wish to pretend that this theory is a startling and
personal innovation. On the contrary. When, during the
past years, I have presented it in lectures or conversation, I
am generally told, Why, that is just what I have been
thinking lately,*’ or, ‘‘ That is what I was telling so-and-so
only a few days ago.” This reaction has seemed to me a
reason not for dropping the theory as trivial or banal, but
rather for bringing it as fully and explicitly as possible into
the light, so that it may be examined publicly and critically,
to be rejected, accepted, or suitably modified as the evidence
for and against it may demand.

During the past twenty years many elements of the theory
have been included in various articles and books, to which
I must acknowledge a general indebtedness without being
able to name any particular one by which I have been
specially influenced. What is new in the outline — it is
hardly more than that — which will follow, is the name given
to the theory, which is not unimportant ; the number of
diverse historical factors which are synthesized under it ; the
elimination of assumptions which have heretofore obscured
its significance ; and the manner of presentation.

With reference to the last, another word is necessary. I
am not writing a programme of social reform, nor am I makipg
any moral judgment whatever on the subject with which I am
dealing. As I have stated, I am concerned exclusively with
the attempt to elaborate a descriptive theory able to explain
the character of the present period of social transition, and
to predict, at least in general, its outcome. I am not con-
cerned, in this book at any rate, with whether the facts indi-
cated by this theory are ‘‘ good ** or bad,” just or unjust,
desirable or undesirable — but simply with whether the theory
is true or false on the basis of the evidence now at our
disposal.

This warning, I topw^ will not be enough to prevent many

1

THE MANAGERIAL REVOLUTION

who read this book from attributing to it a programme and
a morality. The elimination of such considerations is ex-
tremely rare in what is written about history, society, and
politics. In these fields wc are, perhaps understandably,
more anxious for salvation than for knowledge ; but experi-
ence ought to teach us that genuine salvation is possible only
on the foundation of knowledge. And, though this book
contains no programme and no morality, if the theory which
it puts forward is true, or partly true, no intelligent pro-
gramme or social morality is possible without an under-
standing of this theory.

8

II

THE WORLD WE LIVED IN

W. LIVE, THEN, IN A PERIOD OF RAPID TRANSITION FROM
one type of structure of society to another type. But, before
answering our central problem of the world to-morrow, we
must have a coherent idea of the world yesterday. We cannot
really understand where we are going unless we have at least
some notion of where we start from. What were the chief
characteristics of the “ modem world,” the type of society
usually referred to as capitalist ” or “ bourgeois,” which
was dominant from the end of the Middle Ages until, let us
say in order to fix a date, 1914, the beginning of the first
world war?

In the attempt to describe the chief characteristics of
capitalist society (or any society) we arc met at once with
certain difficulties. What shall we describe ? We cannot
describe everything ; all the books ever written are not long
enough for that. Whatever facts we select may seem arbi-
trarily selected. Nevertheless, we have already a guide to
the particular kind of arbitrariness that is relevant to our
purpose. Our problem is concerned with social revolution ;
and social revolution, according to the conception which
has been outlined, is a matter of the most important economic
and political institutions, widespread cultural institutions and
beliefi, and ruling groups or classes. When these change
drastically, the type of society has changed, and a revolution
has occurred. It is modem or capitalist society in terms of
these, then, that must be described. We do not have to
include an account of the thousands of other features of
modem society which might be relevant to some different
purpose*

9

TBB MANAGERIAL REVOLUTION

There is a second arbitrariness as well. In describing
capitalist society, not only do we select out only a few institu-
tional features, but we limit our survey to only a certain (minor)
percentage of the earth’s surface and a certain (minor) per-
centage of the earth’s population. It might seem rather
narrowly conceited for us to draw our conception of what
the modern world has been like almost exclusively from a
few European nations and the United States. There are
more territory and more people, after all, in Asia, Africa,
and South America. However, this arbitrariness, too, can be
motivated. It is, indeed, a sufficient motivation to point out
that our special problem is to discover what is happening,
and is going to happen, to the kind of society that has pre-
vailed during modern times in such nations as England, the
United States, France, and Germany, not the kind of society
that may have existed in centra! India or China or Africa.

Even apart from this, however, it is not unreasonable to
define modern society in terms of the institutions of these
nations. It is they that have been the most powerful influences
in post-medieval times, not only within their own boundaries,
but on a world scale. Their institutions have profoundly
affected those of Asia, Africa, and South America ; whereas
the reverse is not true — the institutions indigenous to those
vast continents have had no comparable effect on the great
modern powers.

It is fairly clear what nations and peoples we must pay
most attention to when trying to sum up the nature of modern
capitalist society. England with its empire comes first on all
counts. Prior to the rise of England, France deserves special
notice for an earlier approximation to certain key modem
political forms ; and the Italian city states, the cities of the
Germanic Hansa (Leagues), and later the cities of the
Lowlands for crucial economic developments. France gets
renewed importance in the late eighteenth century ; and, in
the nineteenth, France and England arc joined by the United
States and Germany, and, in lesser roles, Russia, Italy, and
Japan. The modem world has been the world of these
nations, not of Afghanistan or Nicaragtia or Mongolia.

10

THE WORLD WE LIVED IN

I

Modern capitalist society has been characterized by a
typical mode of economy. The mode of economy has gone
through a number of major phases and transformations, has
been more fluid and changing than any other economy
known to history ; but throughout these transformations
certain decisive features have persisted. All of these features
are sharply different from the outstanding features of feudal
economy, which preceded capitalist economy and out of
which capitalist economy evolved. Among the most im-
portant and typical of them may be listed the following :

I. Production in capitalist economy is commodity production.
Thousands of diverse goods are turned out by the processes
of production, diverse in their nature and suited to the fulfil-
ment of thousands of different human needs. Some can
warm us, some decorate us, some feed us, some amuse us,
and so on. But in capitalist economy all of these diverse
goods can be directly compared with each other in terms of
an abstract property — sometimes called their “ exchange
value ” — represented either exactly or approximately (depend-
ing upon the economic theory which analyses the pheno-
menon) by their monetary price. Products looked at from
the point of view, not of those qualities whereby they can
satisfy specific needs, but of exchange vsilue, in which respect
all products are the same in kind and differ only in quantity,
are what is meant by “ commodities.” All things appear on
the capitalist market as commodities ; everythii^, thus, shoes
and statues and labour* and houses and brains and gold, there
receives a monetary value and can, through monetary symbols,
go through the multitudinous operations of which money is
capable.

All societies, except the most primitive, have produced
some of their goods as commodities. But in every society
excqit the capitalist, and very notably in the feudal society
whic^ preceded capitalism, commodities have made up a
very segment of total production. In the first place, in

a B

THE MANAOERIAI. REVOLUTION

other societies by far the greater proportion of goods was
produced for use by the immediate produders, did not enter
into exchange at all, and therefore had no occasion for func-
tioning as commodities. You cannot eat or wear exchange
value or money ; not the price of goods but the qualities
that enable them to satisfy specific needs are all that enters
into subsistence production. But even where goods entered
into exchange in other societies, again notably in feudal
society, they ordinarily did not -do so as commodities. Ex-
change for the most part in the Middle Ages was not for
money or through the intermediary of money but in kind ;
and there, too, what interested the buying or selling peasant
was not the price he could get or would have to pay, but
whether he had a surplus of one kind of goods capable of
satisfying one kind of need that he could trade for something
else satisfying some other need.

2. The all-important, all-pervasive role of mon^ is an
equally obvious feature of capitalist economy, is indeed a
necessary consequence of commodity production. Money
is not an invention of capitalism ; it has been present in most
other societies, but in none has it played a part in any way
comparable to what capitalism assigns it. The difference is
readily enough shown by the fact that almost all of the
complex banking, credit, currency, and accounting devices
whereby money in its various forms is handled have their
origin in modern times ; and even more strikingly shown
by the fact that the great majority of people in the Middle
Ages never saw any money at all during their entire lives.
No one, on the other hand, will have to be persuaded how
important money has been in the modem world, whether
he thinks of it in terms of personal life or government debts.

A certain belief in connection with money is worth mention-
ing, though it is not peculiar to capitalist society ; the belief,
namely, that all forms of money, such as paper money, drafts,
credits, etc., have an ultimate dependence upon metallic
money, especially silver and gold, and, in develop^ capitalism,
above all on gold. Until recently this was more or less a
d(^;ma of most economists, as it still is some ; and various

S2

THE WORLD WE LIVED IN

laws, not without some justification in fact, were worked out
to relate prices and values, or even the movement of produc-
tion as a whole, to the amount of metallic money present.

3. In capitalist society, money has not one but two entirely
different major economic functions. In the mighty develop-
ment of the second of these lies another of the distinguishing
features of capitalist economy. On the one hand, money is
used as a medium of exchange ; this is the use which is
found in other types of society, and with respect to this use
capitalism differs from them only, as we have seen, in the
far greater extent, coming close to totality in developed
capitalism, to which exchange is carried out through the
intermediary of money.

On the other hand, money is used as capital ; “ money makes
money ” ; and this function was developed little, often not at
all, in other types of society. Under capitalism, money can^
be transformed into raw materials, machines, and' labour ;
products turned out and retranslated into money ; and the
resultant amount of money can exceed the initial amount —
a profit, that is to say, can be made. This process can be
carried out, moreover, without cheating anyone, without
violating any accepted legal or moral law ; but, quite the
contrary, fully in accordance with accepted rules of justice
and mortility.

It is true that the diflFercnce between money functioning as
capital and thereby making more money and money function-
ing as a loan and thereby making interest is somewhat abstruse
when once we get beneath the accountants’ figures where the
difference is usually clear enough. It is also true that money
was, though much less extensively, loaned out at interest in other
societies — though not in all of them by any means — before
capitalism. However, if we note what actually happened,
the decisive practical distinction re-emerges.

During the Middle Ages, money was loaned on a consider-
able scale for two primary purposes : for making war ; and
fi)r what Veblen called “ conspicuous waste ” in such projects
as building great castles, memorials, and churches. When it
w^ r^aid with interest (as it often was not, hence the extremely

13

THte MANAGERIAL REVOLUTION

high nominal rates of interest, often well over loo per cent.),
the funds for repayment had been obtained by levying tribute
of one sort or another, or by outright pillage of conquered
peoples, not, as in the case of money used as capital, from what
is regarded as normal productive economic processes. The
principal exception to these limitations was long-distance
trading, where the merchant (who was in the Middle Ages
proper often also the caravan leader or ship’s captain) had a
chance to make a good deal of money which was perhaps half-
way between capital profit and interest on the money he and
his friends had put into the venture. Where, in some of the
Italian and Germanic towns, additional capital fimctions of
money were to be found, we are meeting the first stages of
capitalist economy, not typical feudal economic institutions.

This medieval situation is clearly reflected in the writings of
the philosophers and theologians on economic subjects. No
conception of money functioning as capital can be found in
them. Even exacting interest on money loaned (permitting
money, even in that sense, to make money) — since they realized
what uses loans were ordinarily put to — was unequivocally
condemned as the grave sin of usury. In designating it a sin,
the philosophers were astute : they rightly grasped that the
practice was subversive and that if it spread it would work to
the destruction of the fabric of their society. Interestingly
enough, a moral exception was sometimes made to money
loaned at interest for merchant-shipping, which, as it was
the one important productive use for such funds, was found
to be less sinful or even virtuous.

4. Under capitalism, production is carried on for profit.
Some writers, more interested in apologizing for capitalism
than in imderstanding it, seem to resent this commonplace
observation as a slur. This is perhaps because they under-
stand it in the psychological sense that is often attributeii to
it — ^namely, that individual capitalist arc psychologically
always motivated by a personal desire for profit, wUch is
sometimes, though certainly not invariably, the case. Hie
observation is not, however, psychological, but «:oiioniic.
Normal capitalist production is carried on for profit hi the

14

THE WORLD WE LIVED IN

sense that a capitalist enterprise must operate, over a period,
at a profit or eke close down. What decides whether a shoe
factory can keep going is not whether the owner likes to make
shoes or whether people are going barefoot or Taadly shod or
whether workers need wages but whether the product can be
sold on the market at a profit, however modest. If, over a
period of time, there continues to be a loss instead of a profit,
then the business folds up. Everybody knows that this is the
case.

Moreover, this was tu)t the case in medieval economy. In
agriculture, by far the chief industry, production was carried
on not for profit but to feed the growers and to allow for the
exactions (in kind, for the most part) of feudal suzerains and
the CJhurch. In other industries (amounting in all to only a
minute percentage of the economy) the medieval artisan
usually made goods (clothes, say, or furniture or cloth or
shoes) only on order from a specific person because that
person wanted them ; and he usually made the goods out of
raw materials supplied by the customer.

5. Capitalist economy is strikingly characterized by a special
kind of periodic economic crisis, not met with or occurring only
very rarely and on limited scales in other types of society.
These capitalist crises of production have no relation either
to “ natural catestrophes ” (drought, famine, plague, etc.) or
to people’s biological and psychological pceds for the goods
that might be turned out, one or the other of which deter-
mined most crises in other types of society. The capitalist
crises are determined by economic relations and forces. It is
not necessary for our purpose to enter into the disputed ques-
tion of the exact causes of the crises ; whatever account is
given, no one denies their reality, their periodic occurrence,
and their basic difference from dislocations of production and
consumption in other types of society.

6. In capitalist economy, production as a whole is regulated,
so far as it is regulated, primarily by “ the market,” both the
internal and the international market. There is no person or
group of persons who consciously and deliberately regulates
proihiction as a whole. The market decides, independently

15

THE MANAGERIAL REVOLUTION

of the wills of human beings. In the earliest (mercantile) and
again in the late stages of capitalist development, monopoly
devices and state intervention try to gain some control over
production. But they operate only in restricted fields, not in
the total productive process, and even in narrow fields they
never succeed in emancipating production altogether from the
market. This is not surprising, for deliberate regulation of
production as a whole (a “ plan,” as it is called nowadays)
would be incompatible with the nature of capitalism. It
would destroy the commodity basis of the economy, the profit
motivation, and the rights of individual ownership.

7. The institutional relations peculiar to capitalist economy
serve, finally, to stratify large sections of the population
roughly into two special classes. These two classes are not
to be foimd in other types of society for the evident reason
that the clzisses are defined by relations peculiar to capitalism ;
and neither class can exist without the other, again because
they are defined partly in terms of each other.

The boundary line between the two classes is by no means
exact, and it is possible for given individuals to pass from one
of the classes into the other. The general division is never-
theless sufiiciently clear. One of these classes is comprised of
those who as individtuds own, or have an ownership interest in,
the instruments of production (factories, mines, land, rail-
roads, machines, whatever they may be) ; and who hire the
labour of others to operate these instruments, retaining the
ownership rights in the products of that labour. This class
is usually called the bourgeoisie or the capitalists.

The second class, usually called the proletariat or the
workers, consists of those who are, in a techidcal sense, “ free ”
labouren. They are the ones who work for the owners.
They are “ free ” in that they arc “ freed from,” that is, have
no ownership interest in, the instruments of production ; and
in the further sense that they are free to sell their labour to
those who do hold such ownership, renouncing, however,
ownership rights in the product of their labour. They are,
in short, wage-earners.

It must be emphasized that these two classes did not exkt,

x6

THE WORLD WE LIVED IN

or existed only to a trivial extent, in other types of society.
In many societies, for example, there were slaves and slave-
holders. In feudal society the majority of the people were
serfs or villeins. These engaged in agriculture and were
“ attached to ” the land — they were not “ free from ” the
instrument of production, namely, the land ; they could not
be ousted from the land, which it was their right, not to own
in a legal sense, but to use ; and, with certain exceptions,
they could not leave the land. The industrial crafts were
carried on, not by employers and wage-workers, but by
artisans, who owned their own tools and what machines were
used, and worked “ for themselves.”

*****

There are, of course, many other features of capitalist
economy which I have not mentioned. If our purpose were
to analyse capitalism itself, several of these, such as capitalism’s
dynamic expansionism at certain stages, its technological
advances, and others, would be as important as some that I
have listed. But our purpose is to analyse not capitalism but
the type of society which is succeeding it and in patticular to
clarify how that type of society differs from capitalism. The
review of capitalist society in this chapter, and what it stresses,
is wholly subordinate to our central problem.

The seven features of capitalist economy which I have sum-
marized are none of them, however, minor. So important and
pervasive are they that they seemed to many people, seem to
many even to-day, a necessary and permanent part of the
structure of social life. People thought, and still think, so
automatically in these terms that they do not realize they are
doing anything more than recording unchangeable fact.
That the owner of a factory should also own its products ;
that we need money to buy things ; that most people should
work for wages for others ; that a business has to lower pro-
duction or cut wages or even stop when it can’t make a profit
— all this seems as natural to many as the need to breaUie or
eat. Yet histcay tells flatly that aU of these institutions are so

*7

THE MANAGERIAL REVOLUTION

far from being inevitably “ natural ” to man that they have
been present in only a small fraction, the last few hundred
years, of the lengthy history of mankind.

2

It is not easy to generalize about the chief characteristics of
the political institutions of capitalist society. They show a
greater diversity, both at different periods of time and in
different nations, than the economic institutions. We can,
however, select out some, which are either common to capitalist
society throughout its history or typical of the chief capitalist
powers.

I. The political division of capitalist society has been into a
comparatively large number of comparatively large national
states* These states have no necessary correspondence with
biological groupings or with any personal relations among the
citizens of the states. They are fixed by definite though
changing geographical boundaries, and claim political juris-
diction over human beings within those boundaries (with the
exception of certain privileged foreigners, who are granted
“ extra-territorial ” rights). The habits of some map makers
in school texts make us liable to forget that nations in the
modern sense arc not at all a universal form of human political
organization.

The political authority of the national states is embodied in
a variety of institutions, the final authority exercised by some
man or group of men, usually a parliament. Each nation
claims absolute political autonomy or sovereignty : that is,
it recognizes no jurisdiction superior to itself (in practice,
naturally, it was only the great nations that could uphold such
claims). The central and controlling political relation for
each individual person is that of being the citizen of a nation.

Such a system and conception are in the widest contrast to
the medieval system and conception. The central and
controlling political relation for each incUvidual person under

i8

THE WORLD WE LIVED IN

feudalism (with the exception of the inhabitants of a few towns)
was not to be the citizen of the abstracted institution, the
nation, but to be “ so-and-so’s man,” the vassal or serf of such
and such a suzerain. His political loyalty and duty were
owed to a person^ and, moreover, to the person who was his
immediate superior in the feudal heirarchy. Dante’s Satan
occupies the lowest point in Hell for the gravest of all feudal
sins : ‘‘ treachery to his lord and benefactor.”

There was, in medieval Europe, at the same time more unity
and greater diversity than in the modern system of national
states. The political unity was no doubt far more real in
theory than in fact, but through the Church, the most powerful
of all social institutions (controlling for a while from a third
to a half of Europe’s arable land) and everywhere present,
some genuine unity in law and the conception of political
rights and duties did exist. The Church itself claimed, as
delegated from God, not only spiritual but political sovereignty
over all mankind, and at the height of its power (around the
year 1200) came close to making its claim good. Within this
partial unity, a kind of political atomism, even chaos, was
usual. Hundreds, even thousands, of local feudal lords —
counts, barons, dukes, earls, including many bishops and
abbots of the Church who weie feudal lords of their own
account — held political power over constantly changing
groups of people and territories. The limits of their political
sovereignty were never clearly defined and depended ordinarily
on their military powei of the moment ; a vassal lord obeyed
his suzerain about as much as his weakness or his schemes
made necessary, and little more. The great vassals made no
bones about disobeying those who called themselves kings
whenever they could get away with it ; indeed, vassals were
not seldom more powerful than the nominal kings whom, in
words, they might acknowledge. There was nothing even
approximating the centralized fundamental authority of the
modem national state,

2. Capitalist society was the first which had, in some
measure, a world extent. From one point of view, the world
ramifications were a result of economic developments : the

19

THE MANAGERIAL REVOLUTION

search for markets, sources of raw materials, and investment
outlets was extended everywhere. But along with this most of
the earth was brought in one way or another within the orbit
of capitalist political institutions. The great powers, in-
cluding within their own immediate borders only a small
fiaction of the territory and population of the world, reduced
most of the rest of the world to either colonies or dominions or
spheres of influence or, in many cases, to weak nations depen-
dent for their continued existence upon the sufferance of the
powers.

The world extension of capitalism did not mean the develop-
ment everywhere in the world of nations comparable to the
few dominating capitalist powers or the full sharing of the
social and cultural institutions of capitalist society. Most of
Asia, Africa, and the Americas, even south-eastern Europe —
the greater part of the land and peoples of the earth, that is
to say — remained poor and backward relations in the capitalist
family. They were parts of capitalist society primarily in the
sense of being controlled by, subject to (and indeed, as such,
necessary to the existence of) the great capitalist nations. The
typical institutions of capitalist culture of the advanced
variety, its way of life, made only small dents in their cultural
mass. Generalizing the facts, we are entitled to conclude that
this division on the world arena between the great advanced
powers and the subject backward territories and peoples was
an integral part of the structural arrangements of capitalist
society.

3. By the term, “ the state,’’ we are referring to the actual
central political institutions of society — to the governmental
administration, the civil bureaucracy, the army, courts, police,
prisons, and so on. The role of the state in capitalist society
has varied greatly from time to time and nation to nation, but
some traits have remained fairly constant*

As compared, for example, with the central political in-
stitutions of feudalism, the capitalist state has been vary firm
and well organized in asserting its authority over certain
fields of human activity which have been generally recpgnizedi
as falling within the state’s peculiar jurisdiction. Witi^n its

ao

THE WORLD WE LIVED IN

national boundaries, for instance, it has enforced a uni-
form set of laws, exacted general taxation, controlled
the major armed forces, kept lines of communication open,
and so on.

But, though the state’s authority was so firm in some fields,
there have been others where it did not penetrate, or penetrated
only very slightly. The scope of the activities of the state, that is
to say, has been limited.

This limitation of the range of the state’s activities was a
cardinal point in the most famous of all capitalist theories of
the state, the liberal theory. The prime interest of liberalism
was the promotion of the capitalist economic process. Accord-
ing to the liberal theory of the state, the business of the state
was to gurantee civil peace (“ domestic tranquillity ”), handle
foreign wars and relations, and with that to stand aside and
let the economic process take care of itself, intervening in the
economic process only in a negative way to correct injustices
or obstacles and to keep the market “ free.”

The “ state ” of liberal theory was an unattainable and, in
reality, unwished-for ideal. Actual states always did intervene
in the econ mic process more actively than the theory called
for : with subsidies, tariffs, troops to put down internal
disturbances or follow investments to foreign parts, or regula-
tions benefiting one or another group of capitalists. In the
early days of capitalism, intervention by the “ mercantilist ”
state was even more widespread. But in spite of this gap
between theory and fact, there was a large kernel of truth in
the liberal theory and a decisive, if only partial, correspondence
with capitalist.reality. The capitalist state intervened in the
economic process, but the interventions, in extent and depth,
never went beyond what was after all a fairly narrow limit.
In the ecpnomic field, we might say, the state always appeared
as subordinate to, as the handmaiden of, the capit^sts, of
“ business,” not as their master.

There is a simple reason for this relation : capitalist economy
is the field of “ private enterprise,” based upon private property
rights vested in individuals as individuals ; an invasion by the
state beyond a certain point into the economic process could

81

THE MANAOEEIAL REVOLUTION

only mean the destruction of those individual property rights
— ^in fact even if not in legal theory — and therefore the end
of capitalist economic relationships.

In many nations there were also other important fields
besides the economic which the state’s activities touched very
little, such as the Church, whose separation from the state
has been such a cherished doctrine in the political history of
the United States.

4. Political authority, sovereignty, cannot remain up in the
clouds. It has to be concretized in some man or group of
men. We say that the “ state ” or “ nation ” makes the laws
that have to be obeyed ; but actually, of course, the laws
have to be drawn up and proclaimed by some man or group
of men. This task is carried out by different persons and
different sorts of institutions in different types of society. The
shift in what might be called the institutional “ locus ” of
sovereignty is always an extremely significant aspect of a,
general change in the character of society.

From this point of view, the history of the political develop-
ment of capitalism is the history of the shift in the locus of
sovereignty to parliament (using the word in its general sense)
and more particularly to the lower house of parliament. In
almost all capitalist nations, the authority to make laws was
vested in a parliament, and the laws were in fact made by the
parliament. Moreover, the political shift to parliament as
central authority coincided historically, on the whole, with
the general development of capitalist society.

The lower house of the English Parliament (it should be
noted that both houses together of the U.S. Congress correspond
to the single House of Commons in England) or the “ Third
Estate of the French National Assembly was the recognized
representative of the “ burgess,” the bourgeoisie — the mer^ants,
bankers, and industrialists, in short, the capitalist class (to-
gether, in the English Commons, with the non-Teudal squire-
archy). The growing institutional supremacy of the lower
house of parliament, therefore, over the feudal lords and later
over the king (who co-operated with the capitalists in the
early stages of the modem era) was the parallel in the pohdod

aa

THE WORLD WE LIVED IN

field to the supplanting of feudal relations by capitalist
relations in the economic field — and, it may be added, of
feudal ideologies by capitalist ideologies in the cultural field.

5. The restriction of range of the state’s activities, noted in
3 above, must not be thought to Jiave any necessary connection
with political democracy ; nor, in general, is there any
necessary connection between democracy and capitalism.
The “ limited state ” of capitalism may — and there have been
many examples in modem history — be an extreme dictatorship
in its own political sphere : consider the absolute monarchies
of the sixteenth and seventeenth centuries, the theocratic
state of Oliver Cromwell, the Napoleonic state. Even the
supremacy of parliament need not imply any considerable
democracy.

There may be some grounds for believing that a regime of
partial democracy was most natural for consolidated capitalist
society. At the least, the most powerful and fully developed
capitalist nations have tended toward such a regime. The
democracy of the capitalist state was never complete. It did
not extend to economic and social relations, for that was
excluded by the character of those relations. Even in the
political field it was restricted, in one way or another, to
only a portion of the adult population. At all times it was
intolerant of any serious opposition opinion that went beyond
the general structure of capitalist institutions. Nevertheless,
except for some primitive groups, it probably went further
than any democracy known in human history before capitalism.

In spite of this, we must, particularly to-day, stress the
point that political democracy and capitalism are not the
same thing. There have been many politically democratic
states in societies which were not capitalist ; and there have
been many non-democratic states in capitalist society. Political
orators, war-propagandists, and others who use words emo-
tively rather than scientifically confuse these facts of history.
They speak of “ democracy *’ when they mean " capitalism ”
or of “ capitalism ” when they mean “ democracy,” or they,
lump the two together in such phrases as “ our way of life.”
If &te of dmocracy is in truth bpund up with the fate

*8

THE MANAGERIAL REVOLUTION

of capitalism, that is something to be independently proved,
not to be taken for granted by using language loosely.

6. The legal system of capitalist society, enforced by the
state, was, of course, such as to uphold the general structure
of capitalist society and to set up and enforce rules for acting
within that structure.

3

It is even harder than in the case of political institutions to
generalize about the belief patterns of capitalist society. For
our purpose, however, it is not necessary to be at all complete.
It is enough if we choose a few prominent beliefs — the promi-
nence can be tested by their appearance in great public
' documents such as constitutions, or declarations of independ-
ence or of the rights of man — which nearly everyone will
recognize as typical of capitalist society and which both differ
from typical feudal beliefs and are sharply at issue in the
present period of social transition.

The beliefi with which we are concerned are often called
“ideologies,” and we should be clear what we mean by
“ ideology.” An “ ideology ” is similar in the social sphere
to what is sometimes called “ rationalization ” in the sphere
of individual psychology. An ideology is not a scientific
theory, but is non-scientific and often anti-sdentific. It is
the expression of hopes, wishes, fears, ideals, not a hypothesis
about events — ^though ideologies arc often thought by those
who hold them to be kientific theories. Thus the theory of
evolution or of relativity or of the electronic composition of
matter are scientific theories ; whereas the doctrines of the
prieambles to the Declaration of Independence or the Con-
stitution of the United States, the Nazi racial doctrines,
Marxian dialectical materialism, St. Anselm’s doctrine of the
meaning of world history, are ideologies.

Ideologies capable of influencing and winning the acceptance
of great masses people are an mdispensable verbal cement
holding the fabric of any given type of society together.
Analyds of ideologies in terms of their practical effects shows

94

THE WORLD WE LIVED IN

US that they ordinarily work to serve and advance the interests
of some particular socisd group or cIeiss, and we may therefore
speak of a given ideology as being that of the group or class
in question. However, it is even more important to observe
that no major ideology is content to profess openly that it
speaks only for the group whose interests it in fact expresses.
Each group insists that its ideologies are universal in validity
and express the interests of humanity as a whole ; and each
group tries to win universal acceptance for its ideologies.
This is true of all the ideologies mentioned in the preceding
paragraph.

The significance of ideologies will be further elaborated in
connection with the managerial revolution.

1. Among the elements entering into the ideologies typical
of capitalist society, there must be prominently included,
though it is not so easy to define what we mean by it, indi-
vidtudism. Capitalist thought, whether reflected in theology
or art or legal, economic, and political theory, or philosophy
or morality, has exhibited a steady concentration on the idea
of the “ individual.” We find the “ individual ” wherever
we' turn : in Luther’s appeal to “private interpretation ” of
the Bible as the test of religious truth ; in the exaggerated
place of “ conscience ” in Puritanism ; in the economic
notion of the economic process’s consisting of millions of
separated individuals each pursuing his own highest profit,
or the correlated moral notion of moraUty’s consisting in
each individual’s pursuing his own greatest personal pleasure ;
in the individualistic geniuses of Renaissance and modem art
or the individualistic heroes of modem literature (the fascina-
tion that Hamlet has had for capitalist society is well deserved) ;
in the very conception of the heart of democracy’s lying in
the private individual’s privately setting forth his will by
marUng a private ballot. . . .

Now the individualist idea of the individual is not an
ultimate any more than any other idea. It has its special
and distinguishing features, differing from those possessed by
the idea of the individual found in other types of society.
According to the prevailing capitalist idea, the fundamental

«5

THE MANAOERIAL REVOLUTION

unit of politics, psychology, sociology, morality, theology,
economics was thought of as the single human individual.
This individual was understood as complete “ in himself,” in
his own nature, and as having only external relations to other
persons and things. Though Hegel and his followers notori-
ously reject this conception, it is unquestionably typical, and
is implicit where not explicit in most of the influential doctrines
and public documents of the fields just mentioned. The
Church, the state, the ideal utopia, are not realities in them-
selves, but only numerical sums of the individual who compose
them.

2. In keeping with the general ideology of individualism
was the stress placed by capitalist society on the notion of
“ private initiative.” Private initiative, supposed, in the
chief instance, to provide the mainspring of the economic
process, was discovered also at the root of psychological
motivation and moral activity.

3. The status of the capitalist individual was further defined
with the help of doctrines of “ natural rights ” (“ free con-
tract,” the standard civil rights, “ life, liberty, and the pursuit
of happiness,” etc.) which are held to belong in some necessary
and eternal sense to each individual. There is no complete
agreement on just what these rights are, but lists of them arc
given in such documents as th^ Declaration of Independence,
the preamble and Bill of Rights of the Constitution of the
United States, or the French Declaration of the Rights of
Man.

4., Finally, in capitalist society, the theological and super-
natural interpretation of the meaning of world history was
replaced by the idea of progress, first appearing in the writers
of the Renaissance and being given deflate formulation during
the eighteenth century. There were two factors in the idea
of progress : first, that mankind was advancing steadily and
inevitably to better and better things ; and, second, the
definition of the goal toward which the advance is taking
place in naturalistic terms, in terms we might say of an earthly
instead of a heavenly paradise.

It should not be supposed-that there was any systematically

s6

THE WORLD WE LIVED IN

worked-out ideology which can be considered the ideology
of capitalism. Many variants are possible. Dozens of differ-
ing ideologies were elaborated by philosophers, political
theorists, and other intellectuals. Their concepts, slogans,
and phrases, filtered down, became the commonplaces of
mass thinking. But all, or almost all, the ideologies, and the
mass thinking, were, we might say, variations on related
themes. They had a common focus in a commonly held set
of words and ideas and assumptions, among which were
prominently to be found those that I have listed.

4

In developed capitalist society it is evident that the position
of greatest social power and privilege was occupied by the
capitalists, the bourgeoisie. The instruments of economic pro-
duction are, simply, the means whereby men live. In any
society, the group of persons controlling these means is by
that very fact socially dominant. The bourgeoisie, therefore,
may be called in capitalist society the ruling class. However,
the idea of a “ ruling class,” as well as the notion of a “ struggle
for power ” among classes, raise issues so closely related to
the central problem of this book that I propose to return to
them in greater detail in Chapter V.

* * * * * *

Probably no one would agree throughout with the selection
and emphasis I have made in this outline of major features
of capitalist society. However, few would, I think, deny
that these are among the major features ; or, more important,
that the disappearance of any considerable percentage of
them would make it hard to regard the consequent structure
of society as any longer “ capitalist.”

That all of these features, and many others along with
them, will disappear — ^and disappear in a matter of years,
OT decades at the most, not generations — is the negative half
of the theory of the managerial revolution.

B7

0

Ill

THE THEORY OF THE
PERMANENCE OF CAPITALISM

D

X^URING THE PAST CENTURY, DOZENS, PERHAPS EVEN

hundreds, of “ theories of history ” have been elaborated.
These differ endlessly among themselves in the words they
use, the causal explanations they offer for the historical
process, the alleged “ laws ’’ of history which they seem to
discover. But most of these differences are irrelevant to the
central problem with which this book is concerned. That
problem is to discover, if possible, what type (if indeed it is
to be a different type) of social organization is on the im-
mediate historical horizon. With reference to this specific
problem, all of the theories, with the exception of those few
which approximate to the theory of the managerial revolution,
boil down to two and only two.

The first of these predicts that capitalism will continue for
an indefinite, but long, time, if not for ever : that is, that the
major institutions of capitalist society, or at least most of
them, will not be radically changed.

The second predicts that capitalist society will be replaced
by socialist society.

The theory of the managerial revolution predicts that
capitalist society will be replaced by “ mEuiagerial society
(the nature of which will be later explained), that, in fact,
the transition from capitalist society to managerial society is
already well under way.

It is clear that, although all three of these theories might
be f alse, only one of them can be true ; the answer that each
of them gives to the question of what will actually happen
in the future plainly denies the answers given by the other two,

aS

PERMANENCE OF CAPITALISM

If, then, the theory of the managerial revolution is true,
it must be possible to present considerations sufficient to justify
us in regarding the other two theories as false. Such demon-
stration would, by itself, make the theory of the managerial
revolution very probable, since, apart from these three, there
are at present no other serious theoretical contenders.

I propose, therefore, in this and the following chapter to
review briefly the evidence for rejecting the theory of the
permanence of capitalism and the theory of the socialist
revolution.

1 |C 9|r 4c He

Oddly enough, the belief that capitalist society will con-
tinue is seldom put in theoretical form. It is rather left
implicit in what people say and do, and in the writings and
sayings of most historians, sociologists, and politicians. Never-
theless, there is little doubt that the majority of people in the
United States hold this belief, though it has been somewhat
shaken in recent years.

When examined, this belief is seen to be based not on any
evidence in its favour, but primarily on two assumptions.
Both of these assumptions are flatly and entirely false.

The first is the assumption that society has always been
capitalist in structure — and, therefore, presumably always
will be. In actual fact, society has been capitalist for a
minute fragment of total human history. Any exact date
chosen as the beginning of capitalism would be arbitrary.
But the start of capitalist social organization on auy wide
scale can scarcely be put earlier than the fourteenth century,
A.D. ; and capitalist domination must be placed much later
than that.

The second assumption is that capitalism has some necessary
kind of correlation with human nature.’’ This, as a matter
of fact, is the same assumption as the first, but expressed
differently. To sec that it is false, it is not required to be
sure just what* human nature ” may be. It is enough to
observe that human nature has been able to adapt itself to
dozens of types of society, many of which have been studied

29

THE MANAGERIAL REVOLUTION

by anthropologists and historians and a number of which
have lasted far longer than capitalism.

With these assumptions dropped, the positive case for the
view that capitalism will continue doesn’t amount to much,
in fact has hardly even been stated coherently by anyone.

But, apart from this lack of positive defence, we can, I
think, list certain "" sets of facts which give all the grounds
that a reasonable man should need for believing that capitalism
is not going to continue ; that it will disappear in a couple
of decades at most and perhaps in a couple of years (which
is as exact as one should pretend to be in these matters).
These facts do not demonstrate this in the way that a mathe-
matical or logical theorem is demonstrated ; no belief about
future events can be so demonstrated. They simply make
the belief more probable than any alternative belief, which
is as much as can be done. (In what follows, for reasons
which will become evident later, I do not include reference
to Germany, Italy, or Russia.)

I. The first, and perhaps crucial, evidence for the view
that capitalism is not going to continue much longer is the
continuous presence within the capitalist nations of mass un-
employment and the failure of all means tried for getting rid
of mass unemployment. The unemployed, it is especially
significant to note, include large percentages of the youth
just entering working age.

Continuous mass unemployment is not new in history. It
is, in fact, a symptom that a given type of social organization
is just about finished. It was found among the poorer citizens
during the last years of Athens, among the urban proletariat
(as they were called) in the Roman Empire, and very notably,
at the end of the Middle Ages, among the dispossessed serfs
and villeins who had been thrown off the land in order to
make way for capitalist use of the land.

Mass unemployment means that the given type of social
organization has broken down, that it cannot any longer
provide its members with socially useful functions even accord-
ing to its own ideas of what is socially useful. It cannot
support these masses for any length of time in idleness, for its

30

PERMANENCE OF CAPITALISM

resources are not sufficient. The unemployed hover on the
fringe of society, on the one hand like a terrible weight
dragging it down and bleeding it to death, on the other a
constant irritant and reservoir of forces directed against the
society.

Experience has already shown that there is not the slightest
prospect of ridding capitalism of mass unemployment. This
is indeed becoming widely admitted among the defenders of
capitalism, as well as many spokesmen of the New Deal.
Even total war, the most drastic conceivable “ solution,’^
could not end mass unemployment in England and France,
nor will it do so in this country. Every solution that has
any possibility of succeeding leads, directly or indirectly,
outside the framework of capitalism.

2. Capitalism has always been characterized by recurring
economic crises, by periods of boom followed by periods of
depression. Until a dozen years ago, however, the curve of
total production always went higher in one major boom
period than in the boom preceding. It did so not only in
terms of the actual quantity of goods produced, but in the
relative quantity of the volume of goods compared to the
increased population and plant capacity. Thus, in spite of
the crises, there was a general over-all increase in capitalist
production which was simply the measure of the ability of
capitalist social organization to handle its own resources.
Since the world crisis of 1927-29, this over-all curve has
reversed ; the height of a boom period, relative to population
and potential capacity, is lower than that of the preceding
boom. This new direction of the curve isj in its turn, simply
the expression of the fact that capitalism can no longer handle
its own resources.

3. The volume of public and private debt has reached a
point where it cannot be managed much longer. The debt,
like the unemployed, sucks away the diminishing blood stream
of capitalism. And it cannot be sh^en off. Bankruptcies^
which formerly readjusted the debt position of capitalism,
hardly make a dent in it. The scale of bankruptcy or inflation
which could reduce the debt to manageable size would at

V

THE MANAGERIAL REVOLUTION

the same time — as all economists recognize — utterly dislocate
all capitalist institutions.

4. The maintenance of the capitalist market depended on
at least comparatively free monetary exchange transactions.
The area of these, especially on a world scale, is diminishing
toward a vanishing point. This is well indicated by the
useless gold hoard at Fort Knox and the barter methods of
Russia, Germany, and Italy.

5. Since shortly after the first world war, there has been
in all major capitalist nations a permanent agricultural
depression. Agriculture is obviously an indispensable part
of the total economy, and the breakdown in this essential
sector is another mark of the incurable disease afflicting
capitalism. No remedies — and how many they are that have
been tried ! — produce any sign of cure. The farming popula-
tions sink in debt and poverty, and not enough food is produced
and distributed, while agriculture is kept barely going through
huge state subsidies.

6. Capitalism is no longer able to find uses for the available
investment funds, which waste in idleness in the account
books of the banks. This mass unemployment of private
money is scarcely less indicative of the death of capitalism
than the mass unemployment of human beings. Both show
the inability of the capitalist institutions any longer to organize
human activities. Duritig the past decade in the United
States, as in other capitalist nations, new capital investment
has come almost entirely from state, not from private, funds.

7. The continuance of capitalism was, we saw, dependent
upon a certain relationship between the great powers and
the backward sections and peoples of the earth. One of the

V most striking developments of the past fifteen years, which has
I been little noticed, is the inability of the great capitalist
nations any longer to manage the exploitation and develop-
ment of these backward sections. This is nowhere better
illustrated than in the relations between the United States
and South America. The United States, in spite of its im-
perious necessity for the nation’s very survival, has not and
cannot devise a scheme for handling the economic phase of

32

PERMANENCE OF CAPITALISM

its hemisphere policy.’’ Though during the past few years,
and above all during the war the road has been wide open
nothing gets done. Here, again, the only workable schemes
are compelled to leave the basis of capitalism.

8. Capitalism is no longer able to use its own technological
possibilities. One side of this is shown by such facts as the
inability of the United States to carry out a housing programme,
when the houses are needed and wanted and the technical
means to produce them in abundance are on hand. (This
is the case with almost all goods.) But an equally sympto-
matic side is seen in the inability to make use of many inven-
tions and new technical methods. Hundreds of these, though
they could reduce immeasurably the number of man-hours
needed to turn out goods, and increase greatly the convenience
of life, nonetheless sit on the shelf. In many entire economic
sectors — such as agriculture, building, coal mining — the
technical methods to-day available make the usual present
methods seem stone age ; and nearly every economic field
is to some degree affected. Using the inventions and methods
available would, it is correctly understood, smash up the
capitalist structure. Technological unemployment ” is pre-
sent in recent capitalism ; but it is hardly anything compared
to what technological unemployment would be if capitalism
made use of its available technology.

These facts, also, show that capitalism and its rulers can no
longer use their own resources. And the point is that, if they
won’t, someone else will.

9. As symptomatic and decisive as these economic and
technical dcJvelopments is the fact that the ideologies of
capitalism, the bourgeois ideologies, have become impotent.
Ideologies, we have seen, are the cement that binds together
the social fabric ; when the cement loosens, the fabric is about
to disintegrate. And no one who has watched the world
during the past twenty years can doubt the ever-increasing
impotence of the bourgeois ideologies.

On the one hand, the scientific pretensions of these ideologies
have been exploded. History, sociology and anthropology
are not yet much as sciences ; but they arc enough to show

33

THE MANAGERIAL REVOLUTION

every serious person that the concepts of the bourgeois
ideologies are not written in the stars, are not universal laws
of nature, but are at best just temporary expressions of the
interests and ideals of a particular class of men at a particular
historical time.

But the scientific inadequacy of the ideologies would not
by itself be decisive. It does not matter how non-scientific or
anti-scientific an ideology may be ; it can do its work so
long as it possesses the power to move great masses of men
to action. This the bourgeois ideologies once could do, as the
great revolutions and the imperial and economic conquests
prove. And this they can no longer do.1

When the bourgeois ideologies were challenged in the Saar
and the Sudetenland by the ideology of Nazism, it was Nazism
that won the sentiment of the overwhelming majority of the
people. All possible discounts for the effects of Nazi terrorism
must not delude us into misreading this brute fact.

Only the hopelessly naive can imagine that France fell so
swiftly because of the mere mechanical strength of the Nazi
war machine — that might have been sufficient in a longer run,
but not to destroy a great nation with a colossal military
establishment in a few weeks. France collapsed so swiftly
because its people had no heart for the war — as every
obsarver had remarked, even through the censorship, from the
beginning of the war. And they had no heart for the war
because the bourgeois ideologies by which they were appealed
to no longer had power to move their hearts. Men are
prepared to be heroes for very fooKsh and unworthy ideals ;
but they must at least believe in those ideals.

Nowhere is the impotence of bourgeois ideologies more
apj^ent than among the youth, and the coming world, after
all, will be the youth’s world. The abject failure of voluntary
military enlistment in Britain and this country tells its own
story to all who wish to listen. It is underlined in reverse by
the hundreds of distinguished adult voices which during 1940
began reproaching the American youth for “ indifference,’’'

unwillingness to sacrifice,” ** lack of ideals.” How right
these reproaches are ! And how little effect they have I

34

PERMANENCE OF CAPITALISM

In truth, the bourgeoisie itself has in large measure lost
confidence in its own ideologies. The words begin to have a
hollow sound in the most sympathetic capitalist ears. This,
too, is unmistakably revealed in the policy and attitude of
England’s rulers during the past years. What was Munich
and the whole policy of appeasement but a recognition of
bourgeois impotence ? The head of the British government’s
travelling to the feet of the Austrian housepainter was the
fitting symbol of the capitalists’ loss of faith in themselves.
Every authentic report during the autumn of 1939 from
Britain told of the discouragement and fear of the leaders in
government and business. And no one who has listened to
American leaders ofi" the record or who has followed the less
public organs of business opinion will suppose that such
attitudes are confined to Britain.

All history makes clear that an indispensable quality of
any man or class that wishes to lead, to hold power and
privilege in society, is boundless self-confidence.

*****

Other sets of facts could easily be added to this list, but
these are perhaps the most plainly symptomatic. Their efiect
moreover, is cumulative ; the attempted remedies for them,
experience shows, only aggravate Aem. They permit no
other conclusion than that the capitalist organization of
society has entered its final years.

35

IV

THE THEORY OF THF PROLETARIAN
SOCIALIST REVOLUTION

TThe second and only other serious alternative to
the theory of the managerial revolution is the theory that
capitalist society is to be replaced by socialist society. This
belief is held by socialists, communists, in general by all who
call themselves Marxists ; and, in slightly different words, by
anarchists and anarcho-syndicalists. Interestingly enough, it
is also held by many others who do not at all consider them-
selves to be Marxists, by not a few, even, who are against
socialism. Many “ liberals ’’ believe that socialism is going
to come. And there are staunch capitalists and defenders of
capitalism, who, though the prospect is not at all to their
taste, believe likewise.

First, we must be clear about what is meant by ‘‘ socialist
society.”

It is worth emphasizing that with respect to the central and
only problem of this book — the problem of what type of
society is to prevail in the immediate future and for the
next period of human history — the theories of anarchists,
socialists, communists, and their subvarieties are the same.
They all agree, in general, as to what they mean by “ socialist
society” (even though they may call it something else
— communism ” or ‘‘ anarchist society ”), and they aU agree
that it is going to come. Their differences are on how it is
going to come and on what ought to be done to help it along,
not on the prediction that it will come.

The determining characteristics of what they mean by
socialist society are that it is classless, fully democratic^ and
international.

36

PROLETARIAN REVOLUTION

By “ classless is meant that in socialist society no person
or group of persons has, directly or indirectly, any property
rights in the instruments of production different from those
possessed by every other person and group ; it amounts to
the same thing to say that in socialist society there are no
property rights in the instruments of production, since a
property right has meaning only if it differentiates the status
of those who have it from that of those who do not. The
democracy of the hypothetical socialist society is to extend,
and completely, to all social spheres — ^political, economic, and
social. And socialist society is to be organized on an inter-
national scale ; if this cannot be done completely in the first
stages, at least this is to be the tendency of socialism. If not
at once international, it is to be always internationalist — as
indeed it would have to be if it is ever to become actually
international.

There is another important point of agreement, at least
since Marx himself, among all the serious organized groups
which have held the theory we are now analyzing. This is
the belief that the working class, the proletariat, has a special
and decisive role to play in the transformation of society
along socialist lines. The main strength of the social move-
ment that will establish socialism is to be drawn from the
working class. This , belief can readily be granted, for, if the
main strength did not come from the working class, where
indeed could it come from ?

Put very simply, the Marxist movement understands the
process as follows : the working class will take over state
power (by insurrectionary means according to the Leninist
wing of Marxism ; by parliamentary means according to the
reformist wing) ; the state will then abolish private property,
either all at once or over a short period of time ; and, aftei^
a certain period of adjustment (called by the Leninist wing
the “ dictatorship of the proletariat ”), socialism will be
ushered in. Under socialism itself, in keeping with its fully
democratic, classless structure, state power in the sense of the
coercive institutions of government (police, army, prisons)
will disappear altogether.

37

THE MANAGERIAL REVOLUTION

(Anarchism differs from Marxism in believing that the state
cannot be used for ushering in the free classless society,
but must be abolished at once, with the job of socialization
to be carried out by the workers' organizations — unions,
co-operatives, etc. The net result, however, is the same.)

Those who believe that capitalist society is to be replaced
by socialist society, in particular Marxists, to whom we arc
justified in devoting primary attention, also, of course, believe
that capitalist society is not going to last, which is implied by
their more general belief. This second belief, that capitalism
is not going to last, is identical with the conclusion of
Chapter III, and I naturally have no quarrel with it, though
I do not agree with all of the reasons which Marxists advance
for holding the belief. But the proposition that capitalism
is not going to last much longer is not at all the same as the
proposition that socialism is going to replace it. There is no
necessary connection between the two. And our primary
concern is with the second.

A survey of Marxist literature quickly reveals that it is far,
far weightier in the analysis of capitalism by which it reaches
the conclusion that capitalism will not last (though Marx
himself gravely under-estimated the time-span allotted to
capitalism) than in the analysis by which it motivates the all-
important positive belief that socialism will replace capitalism.
Yet the fullest agreement with the first, and I agree with very
much of it, does not in any way compel us to accept the
second. In fact, careful study will show that Marxists offer
scarcely any evidence for the second belief. They base it almost
entirely upon one argument and two assumptions. The
argument is meaningless with respect to the problem ; one
assumption is either meaningless or false ; and the second is
simply false.

The argument is a deduction from the metaphysical theory
of “ dialectical materialism.” It is held that Hegel’s meta-
physical logic of thesis, antithesis, and synthesis somehow
guarantees that out of the clash of the two antithetical classes,
bourgeoisie and proletariat, socialism will issue. The deduction
may be all li^t, but no deduction fiom any metaphydcal

38

PROLITARIAN RIVOLUTION

theory can ever tell us what is going to happen in the actual
world of space and time ; this we can predict, with some
measure of probability, only from experience and the inferences
which we make from experience. This argument, therefore,
need concern us no further.

The first assumption is put by Marxists (and others) in this
way : that socialism is the “ only alternative ” to capitalism.
They then assert, in effect, the following syllogism : since
capitalism is not going to last (which we have granted) and
Since socialism is the only alternative to capitalism, therefore
socialism is going to come. The syllogism is perfectly valid,
but its conclusion is not necessarily true unless the second
premise is true : and that is just the problem in dispute.

It is hard to know just what is meant by the statement that
socialism is the “ only alternative ” to capitalism. If this is
another deduction from the metaphysics, it is meaningless so
far as predicting the future goes. Logically, there are any
number, a theoretically infinite number, of alternatives to
capitalism, including all the types of society there ever have
been and all that anyone can imagine. Practically, no doubt,
most of these can be disregarded, since they are fantastic in
relation to the actual situation in the world. But at least a
few can surely not be ruled out in advance without examining
the actual evidence. And the evidence will show that another
type of society, managerial society, is not merely a possible
alternative to both socialism and capitalism (which is enough
to upset the assumption) but a more probable alternative than
either.

The second assumption is, in effect, the following : that the
abolition of capitalist private property rights in the instruments
of production is a sufficient condition, a sufficient guarantee, of
the establishment of socialism — ^that is, of a free, classless
society. Now we already have available historical evidence,
boffi from ancient and modern times, to show that this
assumption is not correct. Effective class domination and
privil^e does, it is true, require control over the instruments
of production ; but this need not be exercised through
individual private property rights. It can be done through

39

THE MANAGERIAL REVOLUTION

what might be called corporate rights, possessed not by
individuals as such but by institutions : as was the case
conspicuously with many societies in which a priestly class
was dominant — in numerous primitive cultures, in Egypt, to
some degree in the Middle Ages. In such societies there can
be and have been a few rich and many poor, a few powerful
and many oppressed, just as in societies (like the capitalist)
where property rights are vested in jjrivatc individuals as such.

Russia, as we shall repeatedly see, has already proved that
such phenomena are not confined to former ages. The
assumption that the abolition of capitalist private property
guarantees socialism must be entirely rejected. It has simply
no justification on the facts. It is a hope, that is all ; and,
like so many hopes, one scheduled for disappointment.

With the collapse of this argument and these assumptions,
the case for the belief that socialism is coming is very slight.
Of course, many people would like it to come, and regard
socialism as the noblest and best form of society that could be
sought as an ideal. But we must not permit our wishes to
interfere with a reasoned estimate of the facts. The prediction
that socialism is coming could correctly rest only upon a
demonstration drawn from contemporary events themselves,
upon showing that there are present to-day in society powerful
tendencies, more powerful than any other, toward socialism,
that socialism is the most probable outcome of what is happen-
ing. And contemporary events show nothing of the kind ;
they seem to some to do so only because they accept these
unjustified assumptions or because they confuse their wishes
with reality.

Moreover, there is ample evidence from actual events that
socialism is not coming, and we must now turn to a brief
survey of some of this evidence. Among the evidence, the
facts about the Marxist movement itself are especially signifi-
cant, since the Marxist movement is the chief organized social
force, if there is any, through which the establishment of
socialism could take place. And here a word of methodological
warning is in order.

The Marxist movement is subdivided into many groups.

40

PROLETARIAN REVOLUTION

The two chief of these, in numbers and influence, are the
reformist (socialist, or social-democratic) wing, consisting
primarily of those parties loosely affiliated with the Second
International, together with a number of unafKliated parties
in various countries having similar programmes ; and the
Stalinist wing, consisting of those parties which are sections
of the Communist or Third International. In addition to
these, there are the opposition branches sprung, like Stalinism,
from the Leninist adaptation of Marxism, chief among which
are the small Trotskyist parties joined in what they call the
Fourth International ; and countless additional parties,
groups, and sects, each claiming descent in its own way
from Marx.

When I speak of the “ Marxist movement ’’ or of ‘‘ Marxists,**
I mean all of these groups and individuals, all those, that is
to say, identified in common speech as Marxist and who,
historically and theoretically, have a plausible connection
with Marx and Marx*s theories. This must be made clear
because of a habit which Marxists have taken over, perhaps,
from the Church. Whenever an analysis is made of actions
of members of the Church or institutions of the Church which
might seem to be detrimental to the good name of the Church
and its divine claims, the reply is always given that these
actions are not “ really ’* those of the Church, which is a
mystic and supernatural body, but only of some erring human
acting not for the Church but in keeping with his sinful
human nature. By this argumentative method, the record
of the Church is, of course, perfect.

Similarly, each variety of Marxist denies responsibility for
the actions of all other varieties, and indeed for all actions of
his own group which have not worked out well or which
have seemed to move away from instead of toward socialism.
Just as with the Church, the case for Marxism is irreproach-
able by this method. We can, however, permit neither of
them this comforting luxury. When we deal the cards, wc
will make sure that they arc not stacked.

Si SI Si St

41

THE MANAGERIAL REVOLUTION

I. The Russian events, since 1917, will occupy us in other
connections. Here I wish to observe that, taken at their face
value, fiicy are powerful evidence against the theory that
socialism is coining. Of course I refer to the actual events,
not those envisaged by the official and unofficial Soviet
apologists. The main pattern of these events is plain enough
for anyone who wants to know it, and there is no way to
make anyone see who has decided in advance to keep his
eyes shut.

In November, 1917, the Bolshevik party, professing a
programme of the transformation of society to a socialist
structure and supported by a large proportion, probably a
majority, of the Russian workers and poorer peasants, took
over state power in Russia. A few months later, private
property rights in the chief instruments of production were
abolished, and property rights were vested in the state.
During the first years of the revolution, the regime success-
fully defended itself in a series of civil wars and wars of
intervention by hostile powers. The regime has kept in power
ever since and is now in its twenty-fourth year.

Socialist society means, we have seen, a society which is
classless, democratic, and international. If socialism is in
truth realizable, if it is scheduled to be the type of society for
the next period of human history, we would not, perhaps,
necessarily have expected that Russia should already have
achieved socialism. We would rightly take into accoimt the
special difficulties resulting from the fact that the revolution
occurred not in an advanced nation but in Russia in 1917 :
that is, in a nation very backward both economically and
culturally, devastated by the results of the war, and surrounded
by aiemies both external and internal (though at the same
time we would wonder why, contrary to the opinion of all
socialist theoreticians prior to 1917, the revolution did occur
in a backward instead of an advanced country).

Neverthe!^, we should correctly expect, on the basis of the
theory that socialism u on its way, to find, without difficulty
and prominently to be noticed, unmistakable tendmies tmard
sochdism. This would mean that, though Russia to^y

4 «

PROLETARIAN REVOLUTION

would not necessarily be socialist — that is, free, classless, and
international — yet it would be closer than it wa^ at the
beginning of the revolution : more free, n,earer to the
elimination of classes and class distinctions, and, if not inter-
national, then internationalist.

Such expectations were in fact held by the leaders of the
revolution itself and by most others who believed in socialist
theory, even those unsympathetic to Russia. Indeed, these
expectations were so strong among Marxists that they acted
as effective dark glasses, preventing Marxists from seeing, or
admitting if they saw, what was actually going on in Russia.
To-day they still continue to blind Stalin’s disciples to be
found in all countries.

Reality, however, as is so often the case, was rude to the
optimistic expectations. Far from showing tendencies toward
socialism, far from taking steps in the direction of socialism,
the Russian revolutionary society developed in a plainly
contrary direction. With respect to the three decisive
characteristics of socialist society — classlessness, freedom, and
internationalism — Russia is immeasurably further away
to-day than during the first years of the revolution ; nor has
this direction been episodic but rather a continuous develop-
ment since those early years. This has occurred in direct
contradiction to Marxist theory : in Russia the key conditions,
as it was thought, for the advance, if not to socialism at least
well into its direction, were present — the assumption of state
power by a Marxist party “ of the workers,” and above all
the supposedly crucial abolition of private property rights in
the chief instruments of production.

The capitalists were, with trivial exceptions, eliminated from
Russian society and have not returned. In spite of this, a new
class stratification, along economic lines, has proceeded to such
a point that it equals or exceeds in sharpness that found in
capitalist nations. This is shown on the one hand in the
ateolute elimination of the great masses of the people from any
control (the crux of property right) over the instruments of
production. It is shown equally well in the income stratifica-
t|cm» According to leon Trot^y, in an article published in

48 ^

THE MANAGERIAL REVOLUTION

late 1939, and to my personal knowledge based on a careful
collation and analysis of statistics published in the Soviet
press, the upper 11% or 12% of the Soviet population now
receives approximately 50% of the national income. This
diflFerentiation ife sharper than in the United States, where
the upper 10% of the population receives approximately
35% of the national income.

(If it is objected that Trotsky, as an enemy of Stalin, would
have been “ prejudiced ” in giving this figure, it may be
remarked that this article was written when Trotsky was in
the midst of a bitter polemical struggle against views held
primarily by myself in which he defended his unshaken belief
that Russia remained still a workers’ socialized state ; the
normal basis, if there were any, would under any circum-
stances have veered toward a playing down rather than up
of the degree of class stratification as shown by income figures.
The percentages, moreover, correspond well enough with
those given by other competent observers — the Soviet apologists,
who are not competent, have not even attempted to give
figures on so delicate a ques^tion ; and allowance for a very
wide margin of error would not alter the significance.)

Though freedom and democracy were never very extensive
in revolutionary Russia, there was a considerable measure
during the first years of the revolution — the years, that is to
say, of greatest tribulation, of famine and civil war and wars
of intervention, when any type of society and regime might
well have been expected to lessen or suspend freedom. The
democracy was represented by the existence of legal opposition
parties, public factions of the Bolshevik party itself, important
rights possessed by local soviets, workers’ committees in
factories, trade unions, etc., and by such factors as the climina-
tioti of titles, special modes of addressing “ superiors,” fancy
uniforms, educational discrimination, and the other outward
marks of social class distinctions.

Every shred of freedom and democracy has by now been
purged from Russian life. No opposition of any kind (the
life-blood any freedom) is permitted, no independent rights
are possessed by any organization or institution^ and the

44

PROLETARIAN REVOLUTION

outward marks of class differences and despotism have one by
one returned. All the evidence indicates that the autocracy
of the Russian regime is the most extreme that has ever
existed in human history, not excepting the regime of Hitler.

In keeping with socialist theories of internationalism, the
leaders of the Russian Revolution expected their spark to
touch off the world revolution. This did not happen, but for
the early years the leaders remained internationalist in out-
look and practice, theoretically indifferent to national boun-
daries, and looking upon the Russian state itself as merely a
fort of the international socialist masses, to be used or sacrificed
if need be to the higher interests of the world revolution.
After the first years, for this internationalism there was sub-
stituted an ever-growing nationalism which has in recent
times come to exceed anything ever present under the Czars
themselves. The pseudo-internationalism, still occasionally
manifested and allegedly represented by the existence of the
Communist International and its parties, is simply the exten-
sion of Russian nationalism on the world arena and inter-
nationalist only in the sense that Hitler’s fifth columns or the
British or United States intelligence services are inter-
nationalist.

If we review honestly the developments in Russia, it is clear
that in no important respect has the theory that socialism is
coming been justified ; every Russian development runs
counter to what that theory leads us, and did lead those who
believed it, to expect. Naturally, dialecticians ” can explain
away what has happened in Russia. They can say that it was
all because Stalin got into power instead of Trotsky or because
of the failure of other nations to revolt or because of Russia’s
backwardness. Next time . . . things will be dififcrent. But
the fact remains that Stalin did get into power, that the other
nations did not successfully revolt, and that the revolution
did take place in a backward country ; and that the Russian
revolution led not toward socialism but toward something
most unlike socialism. Russia was, and this is admitted by
all parties, the ‘‘ first experiment in socialism.” The results of
this experiment are evidence for the view that socialism is not

45

THE MANAGERIAL REVOLUTION

possible of achievement or even of approximation in the
present period of history. Such an experiment, or even
several of them, are not by themselves conclusive and final
demonstration — no experiments are ever conclusive and final.
But we must draw the lessons of the facts we have until,
perhaps, different facts arc placed at our disposal.

But to anticipate briefly : Though Russia did not move
toward socialism, at the same time it did not move back to
capitalism. This is a point which is of key significance for
the problem of this book. All of those who predicted what
would happen in Russia, friends and enemies, shared the
assumption which I have already discussed in this chapter :
that socialism is the “ only alternative ” to capitalism ; from
which it followed that Russia — since presumably it could not
stay still — would either move toward socialism or back to the
restoration of capitalism. Neither of these anticipated develop-
ments has taken place. All of the attempts to explain the present
Russian set-up as capitalist — of which there have recently
been a number — or about to become capitalist have broken
down miserably (no capitalist lidLS any illusions on that score).
Trotsky, otherwise the most brilliant of all analysts of Russia,
to his death clung desperately to this ‘‘ either ... or ”
assumption, and in late years consequently became less and
less able to explain sensibly or predict what happened. The
only way out of the theoretical jam is to recognize that the
assumption must be dropped, that socialism and capitalism
are not the sole alternatives, that Russia’s motion has been
toward neither capitalism nor socialism, but toward managerial
society^ the type of society now in the process of replacing
capitalist society on a world scale.

2. The second - set of facts, constituting evidence that
socialism is not coming, has already been mentioned : the
expected socialist revolution, even the nominally socialist
revolution such as took place in Russia, did not take place
elsewhere, or, if attempted as in Germany, several Balkan
nations, and in China, did not succeed. Yet socialist theory
gave every reason to expect that it would come and would
succeed, and socialist theoreticians did expect it. AH impor-

46

PROLETARIAN REVOLUTION

tant conditions supposed to be necessary for the transition to
socialism were present in the immediate post-war era. The
working class, presumed carrier of the socialist revolution,
proved unable to take power, much less to inaugurate socialism.
Yet most of the capitalist world was in shambles ; the workers,
as the principal part of the mass armies, had arms in their
hands, and the example of Russia was before them.

3. One point of great importance has been proved con-
clusively by the Russian events : namely, that the second
assumption we have discussed — the assumption that the
abolition of capitalist private property rights in the instru-
ments of production is a sufficient condition, a sufficient
guarantee, of the establishment of socialism — is false. These
rights were abolished in Russia, in 1918. Socialism has not
come about, nor even been approached. In fact, the abolition
of these rights not merely did not guarantee socialism, but did
not even keep power in the hands of the workers — who, to-day,
have no power at all. The presumed necessary connection
between doing away with capitalist private property rights,
on the one hand, and classlessness and freedom, on the other,
does not exist. This the facts have proved, and theory, if
theory is to be made the slightest pretence to representing the
facts, will have to adjust itself accordingly.

This, in turn, is close to decisive for the belief that socialism
is about to come. For this belief was really based, more than
on anything else, on the conviction that this necessary con-
nection did exist. The problem of bringing socialism — the
free, classless, international society of Marx’s ideal and Marx’s
predictions — has always been thought, by all varieties of
Marxists, to be, in. final analysis, that of doing away with
bourgeois private property rights. Now we know that this
is not enough to bring socialism. If we still believe that
socialism is possible, we will have to believe it on other grounds
than those which were felt in the past to be sufficient.

4. y socialism is to come, the working class, as we have
seen, has always, and rightly, been held to be the primary
social group which will have a hand in its coming. According
to Marx himself, the inherent development of capitalist society

47

THE MANAGERIAL REVOLUTION

as it tended toward centralization and monopoly was such
that there would take place the proletarianization ” of the
overwhelming bulk of the population ; that is, almost every-
one would become workers. This made socialism easy,
because the workers would have almost no one except a
handful of finance-capitalists to oppose their course.

As is well known, this development did not take place as
predicted by Marx. Sectors of the economy even of advanced
nations, in particular agriculture, resisted the process of
reduction to full capitalist social relations ; most persons
engaging in agriculture are neither capitalists nor workers (in
the technical sense) but small independent producers. Small
independent proprietors remain in many lines of endeavour ;
and the last seventy-five years have seen the growth of the
so-called new middle class,)’ the salaried executives and
engineers and managers and accountants and bureaucrats and
the rest, who do not fit without distortion into either the

capitalist ” or ‘‘ worker ” category.

This was already evident before 1914. Since the first world
war, however, the social position of the working class has
gravely deteriorated. This deterioration may be seen in a
number of related developments :

(a) The rate of increase in the number of workers — especially
the decisive industrial workers — compared to the total popula-
tion has slowed down, and in the last decade, in many nations,
has changed to a degree.

( 4 ) The bulk of the unemployed come from the working
class.

(c) Changes in the technique of industry have, on the one
hand, reduced more and more workers to an unskilled, or
close to unskilled, category ; but, on the other, have tied the
process of production more and more critically to certain
highly specialized skills, of engineering, production planning,
and the like, requiring elaborate training not possessed by, or
available to, many workers. With the methods of production
used in Marx’s own day, there was a higher percentage of
skilled workers to unskilled. The gap in training between an
average worker and the average engineer or production

48

PROLETARIAN REVOLUTION

manager was not so large — indeed, in most plants and enter-
prises there was no need to recognize a separate category of
engineers and scientists and production managers, since their
work was either not needed or could be performed by any
skilled worker.

To-day, however, without the highly trained technical
workers the production machine would quickly run down ; as
soon as serious trouble arose, or change or replacement was
needed, or plans for a new production run were to be made,
there would be no way of handling the difficulties. This
alters gravely the relative position of the workers in the pro-
ductive process. In Marx’s time one could think without too
much strain of the workers’ taking over the factories and mines
and railroads and shipyards, and running them for themselves ;
at least, on the side of the actual running of the productive
machine, there was no reason to suppose that the workers
could not handle it. Such a possibility is to-day excluded on
purely technical grounds if on no others. The workers, the
proletarians, could not, by themselves, run the productive
machine of contemporary society.

{d) There has been a corresponding change in the technique
of making war, which, since social relations are ultimately
a question of relative power, is equally decisive as a mark
of the deterioration in the social position of the working
class.

Capitalist society was the first advanced culture to introduce
mass militias, or armies of the citizenry. The mass armies
were proved to be necessary to capitalism, as Machiavelli had
foretold, by the unfortunate experiences with mercenary armies
and then, later, small standing armies, the characteristic
troops of the first centuries of capitalist society. But mass
armies were at the same time potentially dangerous to the
rulers of capitalist society, since, when they were formed,
arms and training were given to the workers, who might
decide to use them not against the foreign enemy but against
the domestic rulers. Marxist theory, especially the Leninist
branch of Marxism, naturally made a crucial point of this
capitalist phenomenon, and in reality based revolutionary

49

THE MANAGERIAL REVOLUTION

Strategy upon it : the workers, armed in the mass by their
rulers, were to turn their guns in the other direction.

In modem times, up to the first world war, the infantry was
the decisive branch of the armed forces. The weapons and
manoeuvres used by the infantry were comparatively simple :
it took little skill or training to be able to leam them. Any-
body can take his place in a mass infantry attack. Thus if the
ordinary soldiers of the line (the armed workers) revolted,
they could be expected to put up a perfectly adequate fight
against the elements of the armed forces which failed to
revolt.

Beginning with the first world war, and carried vastly
farther in the second, this military situation has been radically
altered. Mass infantry is not eliminated, yet at any rate.
But ractory is to-day seen to depend upon complicated
mechanical devices — airplanes, tanks, and the rest — to pro-
duce and handle which requires, once more, considerable
skill and training. The industrial worker cannot learn these
overnight ; and it is noteworthy that the members of the air
corps and other highly mechanized branches of the armed
forces are drawn scarcely at all from the ranks of the industrial
workers. Just as the new techniques of industry weaken the
general position of the workers in the productive process as a
whole, so do the new techniques of warfare weaken the
potential position of the workers in a revolutionary crisis.
Street barricades and pikestaffs, even plus muskets, are not
enough against tanks and bombers.

5. The important social groups having as their professed aim
the transition to socialism are the various Marxist political
parties. Practical success for such parties does not at all
guarantee the victory of socialism as the Russian experience
shows : in general, there is no necessary correspondence
between the professed aims of a political party and what
happens when it takes power. But practical failure of these
parties is additional, and strong, evidence against the pre-
diction that socialism will come, since it removes one of the
chief social forces which have been pointed to as motivation
for the prediction. And the fact is that during the past two

50

PROLETARIAN REVOLUTION

decades Marxist parties have collapsed on a world scale.
Their fate can be pretty well summed up as follows : they
have all either failed socialism or abandoned it, in most cases
both.

These parties, it should be recalled, comprised in their ranks
and sympathizing circles, tens of millions of persons through-
out the world. During the past twenty years, they have
simply disappeared from existence in nation after nation.
Wherever fascism has risen (and even, as in several Balkan
nations, where fascism has not been conspicuously present),
the Marxist parties have gone under, usually without even a
fight for survival. The greatest of all Marxist movements,
that of Germany, bowed to Hitler without raising a hand.
Nor should we permit ourselves to be deluded by refugee
Marxists who, whether to give themselves prestige (and an
audience) or out of sincere self-deception, tell us about the

vast underground movements.’* There is not the slightest
real indication of the persistence of large organized under-
ground movements. What has happened to the members of
the Marxist parties is that many of them, particularly including
many of the most vigorous, have been absorbed into the
fascist movements'"; others have abandoned their hopes and
become wholly passive ; and, in any case, the new political
techniques serve to atomize the remainder — as they do all
opposition — so that they cannot exist as an organized force
and therefore cannot function seriously in the political arena,
since only organized groups are of importance politically.

But the physical elimination of many Marxist parties is not
the only form of their collapse. Some apologists try to excuse
Marxism by saying that it has “ never had a chance.” This
is far from the truth. Marxism and the Marxist parties have
had dozens of chances. In Russia a Marxist party took
power. Within a short time it abandoned socialism, if not in
words at any rate in the effect of its actions. In most European
nations there were, during the last months of the first world
war and the years immediately thereafter, social crises which ,
left a wide-open door for the Marxist parties : without excep- 1
tion they proved unable to take and hold power. In a large

51

THE MANAGERIAL REVOLUTION

number of countries — Germany, Denmark, Norway, Sweden,
Austria, England, Australia, New Zealand, Spain, France —
the reformist Marxist parties have administered the govern-
ments, and have uniformly failed to introduce socialism or
make any genuine step toward socialism ; in fact, have acted
in a manner scarcely distinguishable from ordinary liberal
capitalist parties administering the government. The
Trotskyist and other dissident opposition wings of Marxism
have remained minute and ineffectual sects without any
influence upon general political developments. The last dis-
torted partial upsurge of the Marxist parties, in connection
with the Popular Front movement (which was, in origin,
simply a device of the Communist International for imple-
menting one side of the Kremlin’s foreign policy of the
moment), shows a record of utter incompetence and weakness
(France) and disastrous, no matter how heroic, defeat (Spain) ;
and ended with a whimper at Munich.

A detailed record of the Marxist parties since 1914 would
only emphasize and re-emphasize the impression that is
obtained from the briefest of surveys. The general summary
is, once again, that these parties have, in practice, at every
historical test — and there have been many — either failed
socialism or abandoned it. This is the fact which neither the
bitterest foe nor the most ardent friend of socialism can erase.
This fact docs not, as some think, prove anything about the
moral quality of the socialist ideal. But it does constitute
unblinkable evidence that, whatever its moral quality, socialism
is not going to come.

6. The practical collapse of the Marxist parties has paralleled
the collapse of the Marxist ideology.

In the first place, the grander scientific pretensions of
Marxism have been exploded by this century’s increases in
historical and anthropological knowledge and by the clearer
contemporary understanding of the nature of scientific method.
The Marxian philosophy of dialectical materialism takes its
place with the other outmoded speculative metaphysics of the
nineteenth century. The Marxian theory of universal history
makes way for more painstaking, if less soul-satisfying,

5a

PROLETARIAN REVOLUTION

procedures in anthropological research. The laws of Marxian
e :onomics prove unable to deal concretely with contemporary
economic phenomena. It would be wrong, of course, to deny
all scientific value to Marx’s own writings ; on the contrary,
we must continue to regard him as one of the most important
figures in the historical development of the historical sciences
— which sciences, even to-day however, are only in their in-
fancy. But to suppose, as Marxists do, that Marx succeeded
in stating the general laws of the world, of man and his history
and ways, is to-day just ludicrous.

The situation with Marxist ideology is the same as that with
the leading capitalist ideologies. As we saw in connection
with the latter, however, the scientific inadequacy of an
ideology is not necessarily important. What is decisive is
whether an ideology is still able to sway the hearts and minds
of masses of men, and we know that this result does not have
to have any particular relation to scientific adequacy. Never-
theless, in the case of Marxism more than in that of most
other ideologies (though to some extent with all), the exposure
of scientific inadequacy is itself a factor tending to decrease
the mass appeal, (Perhaps it is rather that scientific criticism
doesn’t really get to work until mass appeal begins to decline.)
For one of the big selling points of Marxism has been that it is
the “ only scientific doctrine ” of society, and this has un-
doubtedly been a powerful emotional stimulant to its adherents.

The power of an ideology has several dimensions : it is
shown both by the number of tnen that it sways and also by
the extent to which it sways them — that is, whether they are
moved only to verbal protestations of loyalty, or to a will to
sacrifice and die under its slogans. This power is tested
particularly when an ideology, in reasonably equal combat,
comes up against a rival. From all of these points of view
the power of Marxist ideology, or rather of the strictly socialist
aspects of Marxist ideology, has gravely declined. This is
especially noticeable among that so-dccisive section of the
population, the youth, who arc no longer willing to die for
the words of socialist ideology any more than for those of
capitalist ideologies. The only branch of the Marxist ideology

53

THE MANAGERIAL REVOLUTION

which Still retains considerable attractive power is the Stalinist
variant of Leninism, but Stalinism is no longer genuinely
socialist. Just as in the case of the Stalinist party, the Marxist
ideology has kept power only by ceasing to be socialist.

An ideology, of course, does not gain great attractive power
merely because of the words that are in it or the skill of those
who propagate it. These factors cannot be disregarded, but
an ideology is not able to make a v/idespread way among the
masses unless, in however distorted and deceptive a form, it
expresses actual needs and interests and hopes of the masses,
and corresponds, at least in some measure, with the actual
state of social conditions and possible directions of their
development. The weakening of the attractive force of both
capitalist and socialist ideologies is a result primarily of the
fact that they no longer express convincingly those needs and
interests and hopes, no longer correspond at all adequately
to actual social conditions and the actual direction of social
development.

7. The falsity of the belief that socialism is about to
arrive has been shown by an analysis of the unjustified
assumptions upon which that belief is usually based and
b^ a review of specific evidence countering that belief. To
these must be added, what has so far been only hinted- at
but what will occupy us largely in pages to come, the positive
indications, already compelling, that not capitalism and not
socialism but a quite different type of society is to be the
outcome of the present period of social transition.

54

V

THE STRUGGLE FOR POWER

TThe general field of the science of politics is the
struggle for social power among organized groups of men.
It is advisable, before proceeding with the positive elabora-
tion of the theory of the managerial revolution, to try to
reach a certain clarity about the meaning of “ the struggle
for power.”

The words which we use in talking about social groups
are, n^any of them, taken over directly from use in connec-
tion with the activities of individuals. We speak of a group
“ mind ” or group will ” or “ decision ” ; of a war “ of
defence ” ; and similarly of a ‘‘ struggle ” among groups.
We know, roughly at least, what we mean when we apply
these words to individuals and their actions ; but a moment’s
reflection should convince us that groups do not have minds
or wills or make decisions in the same sense that applies to
individuals. ‘‘ Defence ” for an individual usually means pre-
venting some other individual from hitting him ; “ struggle ”
means literal and direct physical encounter, and we can
easily observe who wins such a struggle. But ‘‘ defence ”
and struggle ” in the case of social groups — classes or
nations or races or whatever the groups may be — are far
more complicated matters.

Such words are, when applied to groups, metaphors. This
does not mean, as we are told by our popularizing semanti-
cists, who do not understand what semantics teaches, that we
ought not use such words. It means only that we must be
careful, that we must not take the metaphor as expressing a
full identity, that we must relate our words to what actually
happens.

55

THE MANAGERIAL REVOLUTION

In all but the most primitive types of organized society,
the instruments by which many of the goods (almost all of
them nowadays) which are necessary for the maintenance
and adornment of life are produced are technically social in
character. That is, no individual produces, by himself, every-
thing that he uses ; in our society most people produce, by
themselves, hardly anything. The production is a social process.

In most types of society that we know about, and in all
complex societies so far, there is a particular, and relatively
small, group of men that controls the chief instruments of
production (a control which is summed up legally in the
concept of “ property right,” though it is not the legal con-
cept but the fact of control which concerns us). This control
(property right) is never absolute ; it is always subject to
certain limitations or restrictions (as, for instance, against
using the objects controlled to murder others at will) which
vary in kind and degree. The crucial phases of this control
seem to be two : first, the ability, either through personal
strength, or, as in complex societies, with the backing —
threatened or actual — of the state power acting through the
police, courts, and armed forces to prevent access by others
to the object controlled (owned) ; and, second, a preferential
treatment in the distribution of the products of the objects
controlled (owned).

Where there is such a controlling group in society, a group
which, as against the rest of society, has a greater measure of
control over the access to the instruments of production and
a preferential treatment in the distribution of the products
of those instruments, we may speak of this group as the
socially dominant or ruling class in that society. It is hard,
indeed, to see what else could be meant by “ dominant ”
or “ ruling ” class. Such a group has the power and privilege
and wealth in the society, as against the remainder of society.
It will be noted that this definition of a ruling class does not
presuppose any particular kind of government or any par-
ticular legal form of property right ; it rests upon the facts
of control of access and preferential treatment, and can be
investigated empirically.

56

THE STRUGGLE FOR POWER

It may also be observed that the two chief factors in control
(control of access and preferential treatment in distribution)
are closely related in practice. Over any period of time,
those who control access not unnaturally grant themselves
preferential treatment in distribution ; and contending groups
trying to alter the relations of distribution can accomplish
this only by getting control of access. In fact, since differences
in distribution (income) are much easier to study than rela-
tions of control, those differences are usually the plainest
evidence we have for discovering the relations of control.
Put more simply : the easiest way to discover what the ruling
group is in any society is usually to see what group gets the
biggest incomes. Everyone knows this, but it is still necessary
to make the analysis because of the fact that control of access
is not the same thing as preferential treatment in income dis-
tribution. The group that has one also, normally, has the
other ; that is the general historical law. But for brief
periods this need not invariably be the case, and we
shall see later how significant the distinction is at the
present time.

In feudal society by far the major instrument of production
was the land — feudal economy was overwhelmingly agricul-
tural. De facto control of the land (with important restrictions)
and preferential treatment in the distribution of its products
were in the hands of the feudal lords (including the lords of
the Church), not of course as capitalist landlords but through
the peculiar institutions of feudal property rights. These
lords therefore constituted the ruling class in feudal society.
So long as agriculture remained the chief sector of economy
and so long as society upheld the feudal property rights, the
lords remained the ruling class. The niling class remained
the same in structure, even though the individuals composing
it might, and necessarily did (through death, marriage, en-
noblement, and so on) change. Since the coercive institutions
of the state (armed forces, courts, etc.) in feudal society
enforced these rights, we may properly speak of the mediaeval
state as a' feudal state.

To an ever-increasing extent in post-medieval society, the

57

THE MANAGERIAL REVOLUTION

decisive sectors of economy are not agricultural but mercan-
tile, industrial, and financial. In modern society, the persons
who control access to, and receive preferential treatment in,
the distribution of the products of the instruments of pro-
duction in these fields — and to a varying extent in the land also
— are those whom we call ‘‘ capitalists ’’ ; they constitute the
class of the “ bourgeoisie,^^ Their control is exercised in terms
of the typical property rights recognized by modern society,
with which we are all familiar. By our definition, the
bourgeoisie or capitalists are the ruling class in modem society.
Since the society recognizes these rights, we may properly
speak of it as bourgeois or capitalist society, Since these
rights have been enforced by the political institutions of
modem society, by the state, we may speak similarly of the
bourgeois or capitalist state.

Once again, the existence of the bourgeois class does not
depend upon tlie existence of any particular individuals ; the
individual members change. The existence of the class means
only that there is in society a group exercising, in terms of
these recognized bourgeois property institutions, a special
degree of control over the access to the instruments of pro-
duction, and receiving as a group preferential treatment in
the distribution of the products of these instruments.

What, let us ask, would be the situation in a classless
society, a society organized along socialist lines ? For society
to be “ classless ” would mean that within society there
would be no group (with the exception, perhaps, of temporary
delegate bodies, freely elected by the community and subject
always to recall) which would exercise, as a group, any
special degree of control over access to the instruments of
production ; and no group receiving, as a group, preferential
treatment in distribution. Somewhat more strictly on the
latter point : there would be no group receiving by virtue
of special economic or social relations preferential treatment
in distribution ; preferential treatment might be given to
certain individuals on the basis of some non-economic factor
— ^for example, ill persons might receive more medical aid
than healthy persons, men doing heavy physical work more

58

THE STRUGGLE FOR POWER

food than children or those with sedentary occupations — -
without violating economic classlessness.

A new class rule in society would, in contrast, mean that
society would become organized in such a way that a new
group, defined in terms of economic or social relations differ-
ing from both feudal relations and bourgeois relations, would,
as a group, in relation to the rest of the community, exercise
a special degree of control over access to the instruments
of production and receive preferential treatment in the
distribution of the products of those instruments.

♦ ♦ ♦ ♦ ♦

What, then, is meant by the “ class struggle,’’ the struggle
for power ? ” We say, often, that the bourgeoisie entered into
a struggle for power with the feudal lords and, after a period,
were victorious in that struggle. This is another of the meta-
phors drawn from personal combat and applied to group
conflict. We must examine in what sense the metaphor can
be legitimately used. The inquiry, of course, is important
for us, not in connection with the struggle for power of the
past, but with the struggle to-day and to-morrow.

It is certainly not the case that the capitalists of the world
at some point got togetlier, held a series of meetings, and
came to the decision that they would embark upon a struggle
for power against the feudal lords in order to organize society
in such a manner as to be most beneficial to themselves ;
then went out and did battle against the assembled feudal
lords, defeated them, and took over in person control of all
the key institutions of society. Such behaviour would pre-
suppose a degree of consistency and scientific clarity that
has been possessed by no class in history.

In the first and most fundamental place, the successful
struggle for power ** of the bourgeoisie against the feudal
lords can be interpreted as simply a picturesque way of
expressing the result of what did, in fact^ actually happen :
namely, in the Middle Ages society was organized in a way
that ma4€ the feudal lords the ruling class, possessed of chief

59 »

THE MANAGERIAL REVOLUTION

power and privilege ; later on society was organized differ-
ently, in a way that made the bourgeoisie the ruling class.
Under this interpretation, to say that to-day a certain social
class, other than the bourgeoisie, is struggling for power and
will win that struggle need mean no more than the pre-
diction that in a comparatively short time society will be
organized in a new and different manner which will place
the class in question in the position of the ruhng class, with
chief power and privilege. This is part of what is meant
hereafter in this book when I speak, in connection with the
managerial revolution, of the managers’ “ struggle for power.”

However, more than this is meant. Though the bourgeoisie
did not act in the conscious and critical manner that is sug-
gested by a too-literal reading of the phrase, “ struggle for
power,” they certainly did do something, and not a little,
to extend and consolidate their social domination. Though
they were often far from clear about what they wanted oht
of history, they did not just sit back and let history take its
own course.

Two factors were of decisive importance in transforming
society to a bourgeois structure ; a great deal of fighting
and wars to break the physical power of the feudal lords,
and the propagation on a mass scale of new ideologies suited
to break the moral power of feudalism and to establish social
attitudes favourable to the bourgeois structure of society.
Now, the capitalists did not, in any considerable measure,
do the actual fighting in the wars, nor themselves elaborate
the new ideologies ; but the capiteilists financed those who
did the fighting and the thinking. The actual fighting was
done in the early centuries for the most part by armies of
mercenary soldiers who, after the introduction of gun-powder,
were more than a match for the feudal knights and their
retainers ; and, later on, especially in the great revolutions,
by the non-bourgeois masses, the workers and poor pedants,
liie ideologies were for the most part worked out by in-
tellectuals — writers and political theorists and philosophers —
and by lawyers.

Let us note : the hundreds of wars and civil wars foi^t

6o

THE STRUGGLE FOR POWER

from the fifteenth to the eighteenth century (by which time
the social dominance of the bourgeoisie was assured in the
major nations) were extremely various in character and
motivation ; from the point of view of the participants they
were fought for religious, dynastic, territorial, commercial,
imperial, and any number of other purposes. It is a gross
perversion of history to hold that in them the bourgeoisie lined
up on one side to fight feudal armies on the other. Indeed,
even so far as more or less open class conflicts were concerned,
the capitalists from the beginning were fighting each other
as well as fighting against the feudal lords.

But two facts about these wars are of special significance
for us. First, that the net result in terms of alterations of
the structure of society was to benefit, above all, the hour*
geoisie, as against all other sections of society, and to leave
the bourgeoisie ever more securely the ruling class in society.
Second, the bulk of the actual fighters were not themselves
capitalists. Presumably, at least where it was not a matter
of direct compulsion, most of those who fought believed that
they did so for ends which were beneficial to themselves ;
but, at least so far as economic and social benefit went, this
turned out, for the non-bourgeois bulk of the fighters, either
not to be the case at all or at least far secondary to the
benefit resulting to the capitalists.

Similar remarks apply to the development of the new ideolo-
gies. From the time of the Renaissance a number of more or
less related new ideologies “-religions, philosophies, moralities,
theories of law and politics and society — were developed, and
some of them became widely believed. None of these ideolo-
gies spoke openly in the name of the bourgeoisie ; none of
them said that the best kind of society and politics and
morality and religion and universe was one in which the
capitalists were the ruling class ; they spoke, as all important
ideologies do, in the name of ** truth and for the ostensible
welfare of all mankind.

But, as in the case of the wars, two facts are of special
significance for us* First, that the net result of the wide-
spread acceptance of some of these new ideologies was to

6i

THE MANAGERIAL REVOLUTION

promote patterns of attitude and feeling in society which
benefited, above all, the social position of the bourgeoisie and
the institutions favourable to the bourgeoisie. Second, belief
in, and advocacy of, these ideologies were not at all confined
to the bourgeoisie but spread to all sections of the population.
Presumably, the non-bourgeois sections of the population
believed because they thought that these ideologies expressed
their interests and hopes and ideals. Judged in terms of
economic and social results, this was either not the case at
all or true for the non-bourgeois groups only to a very minor
degree as compared with the capitalists.

* m * * *

There was a general and a special phase in the develop-
ment of bourgeois dominance. In general, the capitalists,
starting from the small medieval towns and trading centres
where primitive capitalist relations were already present at
the height of the Middle Ages, gradually extended their
dominance by reducing a greater and greater percentage
of the widening economy to their control : that is, by bring-
ing an ever-greater percentage of trade and production
within the structure of the capitalist form of economic rela-
tions, by making an ever-greater percentage of the instruments
of production the property of capitalists. This process con-
tinued an almost unbroken expansion until the first world
war. Not only were already existing sectors of the economy
shifted to a capitalist basis, as when an individual master
craftsman with an apprentice or two changed himself into
an employer by hiring employees for wages to work with
his tools and materials at ^ workshop and for his profit ;
even more spectacularly did the capitalists expand the total
area of the economy, the total of production, an expansion '
for which the capitalist economic relations were far better
suited than the feudad.

It must be stressed that the building of bourgeois dominance
began and was carried far within feudalism, while the struc-
ture of society was predominantly feudal in character, While,

62

THE STRUGGLE FOR POWER

in particular, the political, religious, and educational institu-
tions were still controlled in the primary interests of the
feudal lords. This was possible because society accorded the
capitalists, at least to a suflScient extent, those rights
necessary for carrying on capitalist enterprise — of contract,
of taking interest, hiring free workers for wages, etc. — in spite
of the fact that most of these rights were directly forbidden
by feudal law, custom, and philosophy (often, as in the case
of taking interest, pious formulas were used to get around
the prohibitions), and in spite of the fact that the wide exten-
sion of capitalist relations meant necessarily the destruction
of the social dominance of the feudal lords. By the time
the feudal lords, or some of them, woke up to what was
happening and the threat to themselves, and tried to fight
back, the battle was already just about over : for the hour-
geoisie already controlled effectively the key bastions of society.
If feudal society had refused from the beginning to recognize
the bourgeois rights, the outcome might have been very
different ; but this is a useless speculation, since, in practice
and in fact, these rights were, sufficiently, recognized.

The fact that the bourgeoisie did build up their social
dominance, did reduce ever-widejaing sectors of the economy
to their control, within the still-persisting framework of feudal
society was, it would seem, a necessary condition for their
appearing as the ruling class of the succeeding type of society.
This point, in reverse, can reveal to us a decisive but neglected
reason why socialism is not going to come. We have granted
that, if socialism were going to come, the proletsiriat would
have to be the social class chiefly concerned in its arrival.
But the position of the proletariat in capitalist society is not
at all the same as that of the bourgeoisie in late feudal society.
The proletariat does not have a long period to build up
gradually its social dominance, which means, above all, to
extend control over greater and greater percentages of the
instruments of production, a control expressed usually in the
language of property rights. On the contrary, it does not
have any such control, nor can it have in bourgeois society,
or virtually none-

63

THE MANAGERIAL REVOLUTION

Marxists have sometimes thought that the development of
trade-unions can make up for this deficiency. This is com-
pletely an illusion. Experience has proved that trade-unions
are not an anti-capitalist institution, not subversive of
capitalist control over the instruments of production to any
important or long-term extent, but are precisely capitalist
institutions organized on the basis of, and presupposing,
capitalist economic relations, a fact which is well known to
most leading trade-unionists.

The proletariat, thus, has no established base, such as was
possessed by the bourgeoisie^ from which to go on to full social
domination. It does not have the social equipment for the
fight.

To return, however, to the bourgeoisie, I have spoken of
this gradual extension of bourgeois control as the general
phase of the development of bourgeois dominance. This was
not enough to revolutionize the structure of society and to
consolidate the position of the capitalists as the ruling class.
So long as important institutions of society were dominated
by the feudal lords and feudal ideas, the position of the
capitalists was insecure, and the possibilities of capitalist
expansion were severely restricted. In particular was this
true in the case of the political institutions of society, of the
state, since the state comprises the coercive instrumentalities
of society, charged with enforcing rights and obligations.
A feudal state, to take obvious examples, might at any time,
and often did, back the cancellation of debts with an appeal
to the violated Church doctrines against taking interest, might
prevent serfs from leaving the land to seek work as free
labourers, might permit the exaction of feudal dues on capitalist
enterprises, and so on.

Capitalism and the capitalists confronted the problem of
state power. To assure their dominance and advance, the
bourgeoisie had to “ take over state power.’* Here again we
deal in a metaphor. What was needed for the development
of capitalism and the dominance of the capitalists, and what
in time, in fact, resulted, was a transformation in state institu-
tions such that, instead of enforcing the rights and obligations

64

THE STRUGGLE FOR FOWER

of feudal society adjusted to the dominance of the feudal
lords, they enforced the rights and obligations of capitalist
society, adjusted to the dominance of the capitalists. In
saying that the bourgeoisie took over state power and held it
in England, France, the United States, or wherever it may
have been, we do not necessarily mean that capitalists walked
in physically or even that many government officials were
drawn from the ranks of the capitalists. A bourgeois state,
a state “ controlled by the bourgeoisie^ means fundamentally
a state which, by and large, most of the time and on the most
important occasions, upholds those rights, those ways of acting
and thinking, which are such as to permit the continued social
dominance of the bourgeoisie.

As a matter of fact, the transformation of the state institu-
tions into integral parts of a capitalist society was a lengthy
and complicated process, sometimes, but not always, including
bitter civil wars as decisive steps.

In the fifteenth and sixteenth and even the seventeenth
centuries, the early capitalists, we know from the records of
those times, worked closely with the princes or kings. The
king in feudal society had been relatively unimportant, one
feudal lord among others, often with less actual power than
his chief vassals. When the kings began to strengthen their
central authority and to try to build nations in the modem
sense, their most obvious enemies were the feudal lords,
including feudal lords who were supposed to be their own
vassals. The kings sought support from the capitalists. The
capitalists gave support to the Idngs because they, too, wanted
stronger nations with national armies and navies to protect
trade ro\ites, and uniform laws, currencies, and taxes, so
that trade could be carried on without constant interruption
from a hundred feudal barons who considered themselves
independent lords ; because they made huge sums of money
from dealings with the princes ; and because they exacted
protection and privileges in return for the aid they gave*
In the war and peace treaties, the elections of popes or em*
perors, the voyages of explorers and conquering armies during
the sisrteenth century^ we always find a most prominent part

65

THE MANAGERIAL REVOLUTION

played by the money of the Fugger or Medici or Welser or
the other great merchant bankers of Augsburg or Antwerp
or Lyons or Genoa.

But the princes, too, could not be trusted in business matters,
as many of these same great sixteenth-century capitalists found
to their bankruptcy and ruin. The de facto alliance between
prince and capitalists was dissolved, and the prince was ousted,
made a figurehead, or at least restricted in the area of society
over which his power extended. There were more wars and
revolutions, and the ‘‘ ideal bourgeois state of the late
eighteenth and nineteenth centuries emerged : political power
vested in the lower house of a parliament with full assurance
that the parliament was, by constitution, law, habit, custom,
and belief, dedicated to the upholding of the structure of
rights and obligations in terms of Which society is organized
as capitalist.

One last observation in connection with the “ struggle for
power ’’ of the bourgeoisie. Where did the early capitalists
come from ? They came from several sections of society :
adventurers and brigands turned easily into capitalists after
success in some escapade ; artisans or master craftsmen became
capitalists when they began to hire workers for wages ; the
biggest capitalists of the early period came from the ranks of
the merchant shippers, who were, as we saw, a special group
even in the Middle Ages proper. The point I wish to note
is that in some, not a few, cases the capitalists came from the
ranks of the old ruling class, from among the feudal lords
themselves. Many of the feudal lords were killed off in the
various wars ; the family lines of many others died out or
sank into impoverished obscurity. But some of them' turned
themselves into capitalists ; by driving the serfs off their
land and engaging in agriculture as capitalist landlords ; by
undertaking the capitalist exploitation of mines on their land ;
or by using for capitalist ventures gold or jewels or money
that they had acquired. We must remember, for the future
also, diat for a ruling class to be eliminated from society in
favour of another ruling class docs not mean that all of its
individual members and their families disappear. Some of

66

THE STRUGGLE FOR POWER

them may be found, perhaps prominently found, economically
and socially metamorphosed, in the ranks of the new ruling
class.

In describing the character of the present social transition
and of the new type of society which is now developing, I
shall continue to use the language of the ‘‘ struggle for power.”
I shall speak of the class of managers as fighting for power,
in particular for state power, as having ” and propagating
typical ideologies, and I shall speak of the “ managerial state ”
and ‘‘ managerial society.” I shall use this language because
it is easy, well known, and picturesque ; but its metaphorical
significance must not be overlooked. It covers social processes
of the greatest complexity which I shall assume, as we always
assume when we try to learn from experience, are not too
dissimilar in general form to those of the struggle for power

conducted ” by the bourgeoisie^ which I have sketchily touched
on in this chapter.

67

VI

THE THEORY OF THE
MANAGERIAL REVOLUTION

W. ARE NOW IN A POSITION TO STATE IN A PRELIMINARY

way the theory of the managerial revolution, the theory which
provides the answer to our central problem.

The theory holds, to begin with, that we are now in a period
of social transition in the sense which has been explained, a
period characterized, that is, by an unusually rapid rate of
change of the most important economic, social, political, and
cultural institutions of society. This transition is from the
type of society which we have called capitalist or bourgeois
to a type of society which we shall call manageriaL

This transition period may be expected to be short com-
pared with the transition from feudal to capitalist society.
It may be dated, somewhat arbitrarily, from the first world
war, and may be expected to close, with the consolidation of
the new type of society, by approximately fifty years from
then, perhaps sooner.

I shall now use the language of the “ struggle for power
to outline the remaining key assertions of the theory :

What is occurring in this transition is a drive for social
dominance, for power and privilege, for the position of ruling
class, by the social group or class of the managers (as I shall
call them, reserving for the moment an explanation of whom
this class includes). This drive will be successful. At the
conclusion of the transition period the managers will, in fact
have achieved social dominance, will be the ruling class in
society. This drive, moreover, is world-wide in extent^
already well advanced in all nations, though at different
levels of development in different nations.

68

THEORY OF MANAGERIAL REVOLUTION

The economic framework in which this social dominance of
the managers will be assured is based upon the state owner-
ship of the major instruments of production. Within this
framework there will be no direct property rights in the
major instruments of production vested in individuals as
individuals.

How, then, it will be at once asked (and this is the key to
the whole problem), if that is the economic framework, will
the existence of a ruling class be possible ? A ruling class,
we have seen, means a group of persons who, by virtue of
special social-economic relations, exercises a special degree of
control over access to the instruments of production and
receives preferential treatment in the distribution of the
product of these instruments. Capitalists were such a group
precisely because they, as individuals, held property rights
in the instruments of production. If, in managerial society,
no individuals are to hold comparable property rights, how
can any group of individuals constitute a ruling class ?

The answer is comparatively simple and, as already noted,
not without historical analogues. The managers will exercise
their control over the instruments of production and gain
preference in the distribution of the products, not directly,
through property rights vested in them as individuals, but
indirectly, through their control of the state which in turn
will own and control the instruments of production. The
state — that is, the institutions which comprise the state — will,
if we wish to put it that way, be the ‘‘ property ’’ of the
managers. And that will be quite enough to place them in
the position of ruling class.

The control of the state by the managers will be suitably
guaranteed by appropriate political institutions, analogous to
the guarantee of bourgeois dominance under capitalism by
the bourgeois political institutions.

The ideologies expressing the social role and interests and
aspirations of the managers (like the great ideologies of the
past an indispensable part of the struggle for power) have
not yet been fiiUy worked out, any more than were the bour-
geois ideologies in the period of transition to capitalism,

69

THE MANAGERIAL REVOLUTION

They are already approximated, however, from several
different but similar directions, by, for example : Leninism-
Stalinism ; fascism-nazism ; eind, at a more primitive level,
by New Dealism and such less influential American ideologies
as “ technocracy.”

This, then, is the skeleton of the theory, expressed in the
language of the struggle for power. It will be observed that
the separate assertions are designed to cover the central phases
involved in a social “ transition ” and in the characterization
of a “ type of society ” which was discussed in Chapters I
and II.

But we must remember that the language of the struggle
for power is metaphorical. No more than in the case of the
capitalists, have the “ managers ” or their representatives ever
got together to decide, deliberately and explicitly, that they
were going to make a bid for world power. Nor will the bulk
of those who have done, and will do, the fighting in the struggle
be recruited from the ranks of the managers themselves ;
most of the fighters will be workers and youths who will
doubtless, many of them, believe that they are fighting for
ends of their own. Nor have the managers themselves been
constructing and propagating their own ideologies ; this has
been, and is being, done for the most part by intellectuals,
writers, philosophers. Most of these intellectuals are not in
the least aware that the net social efiect of the ideologies
which they elaborate contribute to the power and privilege
of the managers and to the building of a new structure of
class rule in society. As in the past, the intellectuals believe
that they are speaking in the name of truth and for the interests
of all humanity.

In short, the question whether the managers are conscious
and critical, whether they, or some of them, set before them-
selves the goal of social dominance and take deliberate steps
to reach that goal, this question, in spite of what seems to
be implied by the language of the “ struggle for power,” is
not really at issue.

In simplest terms, the theory of the managerial revolution
asserts merely the follovring : Modem society has been

' ^(r

THEORY OF MANAGERIAL REVOLUTION

organized through a certain set of major economic, social, and
political institutions which we call capitalist, and has exhibited
certain major social beliefs or ideologies. Within this social
structure we find that a particular group or class of persons —
the capitalists or bourgeoisie — is the dominant or ruling class
in the sense which has beeri defined. At the present time
these institutions and beliefs are undergoing a process of rapid
transformation. The conclusion of this period of transforma-
tion, to be expected in the comparatively near future, will
find society organized through a quite different set of major
economic, social, and political institutions and exhibiting quite
different major social beliefs or ideologies. Within the new
social structure a different social group or class — the managers
— will be the dominant or ruling class.

If we put the theory in this latter way, we avoid the possible
ambiguities of the overly picturesque language of the “ struggle
for power ” metaphor. Nevertheless, just as in the case of
the bourgeois revolution against feudalism, human beings are
concerned in the social transformation ; and, in particular,
the role of the ruling class-to-be is by no means passive. Just
what part, and how deliberate a part, they play, as well as
the part of other persons and classes (bourgeois, proletarian,
farmer, and the like), is a matter for specific inquiry. What
they intend and want to do does not necessarily correspond
with the actual effects of what they do say and do ; though
we are primarily concerned with the actual effects — which
will constitute the transformation of society to a managerial
structure — we are also interested in what the various groups
say and do.

These remarks are necessary if we are to avoid common
misunderstandings. Human beings, as individuals and in
groups, try to achieve various goals — food, power, comfort,
peace, privilege, security, freedom, and so on. They take
steps wliuch, as they see them, will aid in reaching the goal
in quation. Experience teaches us not merely that the goals
are often not reached, but that the effect of the steps t^cn
is frequently toward a very different result from the goal
which was originally held in mind Mtid which motivated the

71

THE MANAGERIAL REVOLUTION

taking of the steps in the first place. As Machiavelli pointed
out in his History of Florence^ the poor, enduring oppressive
conditions, were always ready to answer the call for a fight
for freedom ; but the net result of each revolt was merely
to establish a new tyranny.

Many of the early capitalists sincerely fought for the freedom
of individual conscience in relation to God ; what they got
as a result of the fighting was often a harsh and barren funda-
mentalism in theology, but at the same time political power
and economic privilege for themselves. So, to-day : we want
to know what various persons and groups arc thinking and
^ doing ; what they are thinking and doing has its effects on
historical processes ; but there is no obvious correspondence
between the thoughts and the effects ; and our central problem
is to discover what the effects, in terms of social structure,
will be.

It should be noted, and it will be seen in some detail, that
the theory of the managerial revolution is not merely pre-
dicting what may happen in a hypothetical future. The theory
is, to begin with, an interpretation of what already has happened
and is now happening. Its prediction is simply that the
process which has started and which has already gone a very
great distance will continue and reach completion. The
managerial revolution is not just around the corner, that
comer which seems never quite to be reached. The corner
of the managerial revolution was turned some while ago.
The revolution itself k not something we or our children
have to wait for ; we may, if we wish, observe its stages
before our eyes. Just as we seldom realize that we are grow-
ing old until we are already old, so do the contemporary
actors in a major social change seldom realize that society is
changing until the change has already come. The old words
and beliefs persist long after the social reality that gave them
life has dried up. Our wisdom in social questions is almost
always retrospective only. This is, or ought to be, a humili-
ating experience for human beings ; if justice is beyond us,
we would like at least to claim knowledge.

7.2

VII

WHO ARE THE MANAGERS?

must now clear up a question the answer to
which has so far been postponed. Who are these managers,
the class which is in the process of becoming the ruling class
of society ? The answer which interests us will not be given
in terms of individuals : that is, we do not want to know
that Mr. X, Miss Y, and other separate persons are managers.
The answer that we need will be, first of all, in terms of
function : by virtue of what function is it that we shall designate
. an individual as a manager ? Whoever the individual may
be, now or in the future, how are we to decide whether or
not he is a manager ? The functions that are of initial and
prime importance to us are, of course, those functions in
relation to the major instruments of production, since it is
the relation to the instruments of production which decides
the issue of class dominance, of power and privilege, in society.

The first part of the answer might seem to be only a verbal
juggle and of no more value than any other verbal juggle : '
the managers are simply those who are, in fact, managing the
instruments of production nowadays. Certainly, saying this
does not appreciably advance our understanding. We must,
therefore, investigate more carefully to see just who is doing
the managing ; and, in the investigation, we shall have to
analyze out several ideas which are confusedly grouped
together under the concept of “ management.”

It would seem obvious that in capitalist society it would
be the capitalists who, in decisive respects at least, do the
managing. If they do not manage the instruments of pro-
duction, how could they maintain their position as nding
dais, which depends upon control over the instruments of

73

THE MANAGERIAL REVOLUTION

production ? This is obvious, and the answer to this question
is that they could not. But during the past several decades
the de facto management of the instruments of production has
to a constantly increasing extent got out of the hands of the
capitalists, and it is this fact that so plainly proves society
to be shifting away from capitalism and the capitalists to be
losing their status as the ruling class. In ever-widening sectors
of world economy, the actual managers are not the capitalists,
the bourgeoisu ; or, at the very least, the managerial preroga-
tives of the capitalists are being progressively whittled down.
The completion of this process means the elimination of the
capitalists from control over the economy ; that is, their
disappearance as a ruling class.

Let us make some distinctions : It is unnecessary to stress
that the most important branches of modern industry are
highly complex in technical organization. The tools, machines
and procedures involved are the results of highly developed
scientific and technical operations. The division of labour is
minute and myriad ; and the turning out of the final product
is possible only through the technical co-ordination of a vast
number of separate tasks, not only within the individual
factory, but in mines, farms, railroads, steamships, affiliated
processors, and the like.

If we continue to look purely at the technical side of the
process, we may observe the following : In comparison with
the organization of industry in the period prior to modern
mass production, the individual tasks, with the notable excep-
tion of a comparatively small percentage, require relatively
less skill and training on the part of the individual worker.
A century ago it took many years and considerable native
aptitude to make a skilled general mechanic of the kind who
then made engines or buildings ch- carriages or tools or
machines. To-day it takes a couple of weeks to make a
worker ready to take his full place on a production or assembly
line. Even so-called skilled work to-day usually needs no
more than a few months’ training. But, conversely, at the
same time to-day a small percentage of tasks requires very
great training and skill. Or let me put it in this way : within

74

WkO ARE THE MANAGERS?

the process of production, the gap, estimated both in amount
of skill and training and in difference of type of function,
between the average worker and those who are in charge, on
the technical side, of the process of production is far greater
to-day than in the past.

From among those tasks which, to-day, require lengthy
training and considerable skill, three may be separated out.

One type is found widely in those industries which, like the
building industry, have not yet been organized in accordance
with modem methods. There is, however, no technical reason
why this had not been done in such industries. If it were
done, the relative number of highly skilled workers in, for
example, building would at once enormously decrease.

Another type consists of those tasks which need elaborate
training in the physical sciences and in engineering. These
have greatly increased in recent decades. A century ago
there were scarcely any highly trained chemists, physicists,
bio-chemists, or even engineers functioning directly in industry,
a fact which is plainly witnessed by the almost complete lack
of educational facilities for training such industrial scientists
and engineers. The comparatively primitive techniques of
those days did not require such persons ; to-day few branches
of industry could operate without their constant services.

The third type consists of the tasks of the technical direction
and co-ordination of the process of production. All the
necessary workers, skilled and unskilled, and all the industrial
scientists will not turn out automobiles. The diverse tasks
must be organized, co-ordinated, so that the different materials,
tools, machines, piants, workers are all available at the proper
place and moment and in the proper numbers. This task of
direction and co-ordination is itself a highly specialized func-
tion. Often it, also, requires acquaintance with the physical
sciences (or the psychological and social sciences, since human
beings are not the least among the instruments of production)
and with engineering. But it is a mistake (which was made by
' Vcblcn, among others) to confuse this directing and co-
ordinating ftmetion with the scientific and engineering work
which I i^ve listed under the second type of task. After all,

75

F

THB UAMAGERIAL REVOLUTION

the engineers and scientists of the second type are merely
highly skilled workers, no different in kind . foam the worker
whose developed skill enables him to make a precision tool or
operate an ingenious lathe. They have no functions of
guiding, administering, managing, organizing the process of
production, which tasks are the distinctive mark of the third
type. For these tasks, engineering and scientific knowledge
may be, though it is not always, or necessarily, a qualification,
but the tasks themselves are not engineering or science in the
usual sense.

It is this third type of fimction which, in the fullest and
clearest meaning, I call “ managing ” ; and those who carry
out this type of function arc they whom I call the “ managers.”
Many different names are given them. We may often recog-
nize them as “ production managers,” operating executives,
superintendents, administrative engineers, supervisory tech-
nicians ; or, in government (for they are to be found in
governmental enterprise just as in private enterprise) as
administrators, commissioners, bureau heads, and so on. I
mean by mamagers, in short, those who already for the most
part in contemporary society are actually managing, on its
technical side, the actual process of production, no matter
what the legal and financial form — individual, corporate,
governmental — of the process. There are, to be sure, grada-
tions among the managers. Under the chief operating
executives of a corporation like General Motors or U.S. Steel
or a state enterprise like the TVA there are dozens and
htmdreds of lesser managers, a whole heirarchy of them. In
its broader sense the class of managers includes th^m all ;
within the class there are the lesser and the greater.

But, it may well be commented, there is nothing new in the
existence of managers. Industry has always had to have
managers. Why do they suddenly assume this peculiar
importance ? Let us examine this comment.

In the first place, industry did not always require managers,
at the very least not at all in the sense that we find them
to-day. In feudal tim«i the individual serf and his family
tilled the small plot of sml to which he was attached \ the

76

WHO ARE THE MANAGERS?

individual artisan with his own tools turned out his finished
product. No manager intervened to regulate and organize
the process of production. Managers entered in only to the
negligible sector of economy where larger-scale enterprise was
employed. |

Even in earlier capitalist times, the function of technical
management was not crucial. The process of production was
so simple, the division of labour so little developed compared
to to-day, that hardly any special skill and training were
necessary to carry out the functions of management. Nearly
anyone who had any reasonable acquaintance with the industry
in question could handle them.

Equally decisive for our purpose is the differentiation in
who does the managing, what prerogatives attach to manage-
ment, and how the functions of management are related to
other economic and social functions.

In the earlier days of capitalism, the typical capitalist, the
ideal of the ideologists before and after Adam Smith, was
himself his own manager so far as there were managerial
functions other than those assigned to some reliable skilled
worker in the shop. He was the individual entrepreneur,
who owned the whole or the greater share of a factory or
mine or shop or steamship company or whatever it might be,
and actively managed his own enterprise ; perhaps to retire
in old age in favour of management by his heirs. But, as is
well known, the growth of large-scale public corporations
along with the technological development of modem industry
have virtually wiped such types of enterprise out of the im-
portant sections of the economy ; with a few exceptions, they
remain only among the small businesses which are trivial
in their historical influence.

These changes have meant that to an ever-growing extent
the managers are no longer, either as individuals or legally or
historically, the same as the capitalists. There is a combined
shift : through changes in the technique of production, the
functions of management become more distinctive, more
complex, more specialized, and more crucial to the whole
process of production, thus serving to set off those who

77

THE MANAGERIAL REVOLUTION

perform these functions as a separate group or class in society ;
and at the same time those who formerly carried out what
functions there were of management, the bourgeoisie^ themselves
withdraw from management, so that the difference in function
becomes also a difference in the individuals who carry out the
function.

♦ ♦ ♦ ♦ «

Let us take a hypothetical and over-simplified example in
order to make more precise what is meant by “ management
and to separate this off from other ideas which arc often
grouped with it. We will let our example be an imaginary
automobile company. In connection with the ownership,
control, and management situation in relation to this com-
pany, we may distinguish the following four groups :

I. Certain individuals — the operating executives, produc-
tion managers, plant superintendents, and their associates —
have charge of the actual technical process of producing. It
is their job to organize the materials, tools, machines, plant
facilities, equipment, and labour in such a way as to turn out
the automobiles. These are the individuals whom I call the
managers.”

It should be observed that the area of production which any
group of them manages is most variable. It may be a single
small factory or mine or a single department within a factory.
Or it may be a large number of factories, mines, railroads, and
so on, as in the case of the chief managers of the great United
States corporations. In theory the area could be extended to
cover an entire inter-related branch of industry (automobiles,
mines, utilities, railroads, whatever it might be), or most, or
even all, of the entire mechanism of production. In practice
in the United States at present, however, there do not exist
managers in this sense for whole branches of industry (with
possibly one or two exceptions), much less for a major portion
or all of industry as a whole. The organization and co-
ordination of industry as a whole is carried on through the
instrumentality of the market,” without deliberate and
explicit management exercised by specific managers, or indeed,
by anyone else*

78

WHO ARE THE MANAGERS?

2. Certain individuals (among whom, in the United States
at present, would ordinarily be found the highest ranked and
best paid of the company officials) have the functions of
guiding the company toward a profit; of selling the auto-
mobiles at a price and in the most suitable numbers for
yielding a profit ; of bargaining over prices paid for raw
materials and labour ; of arranging the terms of the financing
of the company ; and so on. These functions are often also
called those of “ management ” and those who fulfil them,
“ managers.” However, there is clearly no necessary con-
nection between them and the first type of function. From
the point of view of the technical process of production, a car
would be neither worse nor better because of what it sold for
(it could be given away and still be the same car, technically
speaking) or what the materials AVhich went into it cost ; nor,
so far as technical problems go, does the difference between
bank loans at 4% or 5% show up in the power of the motor,
or a change in dividend rate alter the strength of the frame.

In order to distinguish this group from the first, I shall call
the individuals who make it up “ finance-executives ” or
simply “ executives,” reserving the terms “ management ”
and “ managers ” for the first group only.

3. Certain individuals (among whom in the United States
at present would be many of the directors of the company and
more particularly the bankers and big financiers who actually
appoint the directors) have problems different from either of
the first types. Their direct concern is not, or need not be,
either the technical process of production or even the profit of
the particular company. Through holding companies, inter-
locking directorates, banks, and other devices, they are in-
terested in the financial aspects not merely of this automobile
company but of many other companies and many market
operations. They may wish to unite this company with
othersi, in order perhaps to sell a stock or bond issue to the
public, independently of the effect of the merger on the
technical process of production or on the profits of our original
cmnpany. They may want, for tax or speculative or other
reasons, to lower the profit of this pompany, and could do^so

79

THE MANAGERIAL REVOLUTION

by, for example, raising prices charged by supply companies
which they also were interested in. They may want to put
some competitors out of business or influence politics or
inflate prices ; and any of such aims might be altogether
independent of the requirements of production or profit in
the particular automobile company. Any number of variants
is possible. I shall call this third group the “ finance-
capitalists.”

4. Finally there are certain individuals (a comparatively
large number as a rule in the United States at present) who
own in their names stock certificates in the automobile com-
pany and who are formally and legally the “ owners ” of our
company. In fact, however, the great bulk of them, com-
prising in sum the legal “ owners ” of the substantial majority
of the stock of the company, have an entirely passive relation
to the company. The only right they possess with reference
to the company is to receive, as against those who do not have
stock certificates registered in their names, money in the form
of dividends when on occasion dividends are declared by the
directors.

This four-fold separation into “ managers,” “ executives,”
“ finance-capitalists,” and “ stockholders ” is, in reality, a
separation of function, of four of the types of relation in which
it is possible to stand toward a certain section of the instru-
ments of production. It is theoretically possible, therefore,
that one and the same individual, or one and the same group
of individuals, should perform all four of these functions, should
stand in all four of these relations to the instruments of pro-
duction in question (in our hypothetical case, the tangible
assets of the automobile company). That is, one and the same
individual (Henry Ford, as of some years ago, was a late and
favourite example) or group of individuals could manage the
production of Ac company, direct its policy so as to make a
profit, integrate its activities in relation to banks and to
other companies (if such were in question), and be Ae
sole stockholder of Ae company. Not only is such an
identity possible : unA comparatively recently, it was
normally Ae case.

80

WHO ARE THE MANAOERS?

To-day, however, it is very seldom the case, especially
in the more important sections of industry. The four
functions arc much more sharply differentiated than in
the past ; and they are, as a rule, performed by different
sets of persons. It is not always so, of course ; but it tends
to become more and more so. Even where there is
overlapping, where the same individual performs several of
these functions, his activities in pursuit of each arc easily
separable.

Two further facts about these groups may be noted : In
most large corporations, which together are decisive in the
economy, the bulk of the stockholders, holding in their names
the majority of the shares of stock, have, as everyone knows,
the passive relation to the company which has been referred
to. With only the rarest exceptions, they exercise no real
control over the company except for the minor element of
control involved in their preferential sharing (as against non-
stockholders) in the profits, or rather the declared dividends,
of the company. But the third group in our list (the finance-
capitalists) are also, some of them at any rate, stockholders.
Together they usually do not own in the legal sense a majority
of the shares, but they ordinarily own a substantial block of
the shares, and have at their disposal liquid funds and other
resources whereby they can, when need arises, obtain from
the small stockholders enough “ proxies ” on stock shares to
be able to vote a majority.

Thus this third group is in a legal position of ownership
toward the company and the instruments of production in-
cluded among the company’s assets : if not with the un-
ambiguous title of an earlier capitalist, who in his own name
owned all, or a majority of, the shares of a company, at least
to a sufficient degree to preserve the meaning of the legal
relationship.

Sometimes the executives of Group 2 are also included in
Group 4 and have substantial legal interests of ownership in
the company (that is, have registered in their own or their
families’ names substantial blocks of the company’s stock).
But this is very seldom the case with the managers proper

81

THE MANAGERIAL REVOLUTION

with the members of Group i these ordinarily have no legal
ownership interest in the company, or at most a very small
interest : that is, they are not usually large stockholders in
the company.

Second, there is a complete difference among these groups
with respect to the technical role of their respective functions in
relation to the process of production. The process of pro-
duction is technically and literally impossible unless someone
is carrying out the functions of management, of Group i — not
necessarily the same individuals who carry them out to-day,
but, at any rate, someone.

Some of the finance-executive functions comprised in Group 2
are also technically necessary to the process of production,
though not necessarily in the same sense as to-day : that is, not
necessarily (from a technical point of view) for the sake of
profit as understood by capitalism. There must be some
regulation of the quality, kinds, numbers, and distribution of
products apart from the theoretic abilities of the instruments
of production to turn products out. This regulation would not
have to be achieved, however, as it is through the finance-
executives, in terms of capitalist profits for the company. It
could be done in subordination to some political or social or
psychological aim — war or a higher standard of mass living or
prestige and glory or the maintenance of some particular power
relationship. In fact, with profit in the capitalist sense
eliminated, the technically necessary functions of the finance-
executives of Group 2 become part of the management
functions of Group i, if management is extended over all
or most of industry. Management could, that is to say,
absorb all of the technically necessary functions of the non-
managing executives.

But still, from a strictly technical viewpoint, the remaining
function — the “ profit-making ” functions — of Group 2 and all
the functions of Groups 3 and 4 — ^finance-capitalist and stock-
holder — are altogether unnecessary (whether or not desirable
from some other point of view) to the process of production.
So far as the technical process of production goes, there need
not be finance-capitalists or stockholders, and ^e executives of

8 a

WHO ARE THE MANAGERS?

Croup 2, stripped of many of their present fiinctions, can bt
merged in the management Group

Not only is this development conceivable : it has already
been almost entirely achieved in Russia, is approached more
and more nearly in Germany, and has gone a considerable
distance in all other nations. In the United States, as every-
where, it is precisely the situation to be found throughout
state enterprise.

This development is a decisive phase of the managerial
revolution.

♦ ♦ ♦ ♦ *

The so-called ‘‘ separation of ownership and control,”
paralleling the growth of the great public corporations of
modern times, has, of course, been a widely recognized
phenomenon. A decade ago it was the principal subject of
the widely read book, The Modem Corporation and Private
Property^ by Berle and Means. In this book, the authors
showed that the economy of the United States was dominated
by the two hundred largest non-banking corporations (they
did not discuss the relations of these to financial houses) ; and,
second, that the majority of these corporations were no longer,
in practice, controlled by their nominal legal owners (that is,
stockholders holding in their names a majority of the shares
of stock).

They divided these corporations according to types of
control.” In a few, control was exercised by a single in-
dividual (more often, single family) who was legal owner of all
or a majority of the stock ; in others, by individuals or groups
which owned not a majority but a substantial percentage of
the stock. Most, however (in 1929, 65% of these 200 corpora-
tions with 80% of the totsd assets), they decided were what
they called, significantly enough, ** management-controlled.”
By management-controlled,” as they explained, they meant

^ I must warn that this fourfold division which I have made bears no relation
to the usual division between ** industrial capitalists ** and ** finance-capitalists/*
This latter disdnetion is of great importance in studying the historical develop*
^ment of cartalism, but seems to me of little value in the analysis of the
structure of jpresent-day capitalism. In particular, it is of no value in
connectmn with the central problem of th» book.

8s

THE MANAGERIAL REVOLUTION

that the management (executives) of these companies, though
owning only minor percentages of the shares of their corpora-
tions, were in actuality self-perpetuating in control of the
policies and the boards of directors of the companies, and able
to manipulate at will, through proxies, majority votes of the
nominal owners, the shareholders. The American Telephone
and Telegraph Corporation is the classic example of “ manage-
ment-control.’*

Though briefly, Berle and Means also took up the extremely
important point that in the nature of the case there were
sources of frequent conflict between the interests of the “ con-
trol group ” (most often, the management) and the legal
owners. This is apparent enough to anyone who recalls the
economic events of the past generation. Many books have
been written about the difficulties of the run-of-the-mine
common stockholders, often as a result of the policies of the

control group ” of “ their own ” company. Wealth, power,
and even other possible interests (such as maximum industrial
efficiency) of the control group quite naturally do not often
coincide with maximum dividends and security for the common
stockholders.

The analysis by Berle and Means is most suggestive and in-
directly a powerful confirmation of the theory of the managerial
revolution, but as it stands it is not carried far enough for our
purposes. In their concept of “ management-control ** they
do not distinguish between management in the sense of actual
direction of the process of production (the sense of our Group i
and the only sense in which we refer to management ”) and
management in terms of profit, selling, financing, and so on
(our Group 2, the finance-executives). Indeed, their use of
** management,” as is usually the case, is closer to the latter
than the former, which results really from the fact that in most
big corporations to-day the chief and best-known officials arc
of the second or executive, not of the first or manager, type*
Moreover, Berle and Means do not include any study of the
way in which their supposedly self-perpetuating and autono^
mous managements are in actuality often controlled by big
banks or groups of financiers (our Group 3)*

84

WHO ARE THE MANAGERS?

One result of such a refinement and amplification of the
Bcrle and Means analysis would be to show that the sources
of possible and actual conflict among the groups are far more
numerous and more acute than they indicate. Among these
sources, three should be stressed :

1. It is a historical law, with no apparent exceptions so far
known, that all social or economic groups of any size strive
to improve their relative position with respect to power and
privilege in society. This law certainly applies to the four
groups into which we have divided those who stand in some
sort of relationship or ownership, management, or control
toward the instruments of production. Each of these groups
seeks to improve its position of power and privilege. But, in
practice, an improvement in the position of one of them is not
only not necessarily an improvement for the others ; often it
means a worsening of the position of one or all of the others.

In periods of great prosperity and expansion, this is not
very irritating, since all four can advance relatively as against
the rest of society ; but, as we have already seen, such period
have ended for capitalism. In conditions which are now
normal, an increase in income for the managers or even the
executives of Group 2 means so much the less for Group 3
(the financiers) and Group 4 (the stockholders).

Even more apparently, the relations of control over the
operations of the instruments of production raise conflicts,
since the sort of operation most favourable to one group
(expanding or contracting production, for example) very
oftep is not that most favourable to another. And, in general,
there is a source of permanent conflict : the managers proper
receive far less reward (money) than the executives and
especially the finance-capitalists, who get by far the greatest
benefits. From the point of view of the manager group,
especially as economic conditions progressively decay, the
reward allotted to the finance-capitalists seems inordinate and
unjustified, all the more so because, as the managers see it
more and more dearly, the finance-capitalists are not perform-
ing any function necessary to the process of production.

2. All four of these groups, to one or another degree, are

85

THE MANAGERIAL REVOLUTION

powerful and privileged as against the great masses of the
population, who have no interest of ownership, management,
or control in the instruments of production and no special
preferential treatment in the distribution of their products.
Consequently, the masses have a tendency to strive for a
greater share of power and privilege as against all four of
these groups* The result of this situation might be expected
to be a merging of the conflicts among the four groups and
a common front against the pressure of the masses. This
has indeed been often the case. Nevertheless, the conflicts
among the groups are real and cannot be eliminated even
in the face of a common danger. In fact, the presence of
the common danger is itself a source of new conflicts. This
follows because the groups, from the very status they occupy
and functions they fulfil, favour different methods of meeting
the danger and of maintaining privilege as against the masses.
The differences become sharpened under the crisis conditions
of contemporary capitalism. This can be made clear by a
single example :

The position, role, and function of the managers are in no
way dependent upon the maintenance of capitalist property
and economic relations (even if many of the managers them-
selves think so) ; they depend upon the technical nature of
the process of modern production. Consequently the pre-
servation of the capitalist relations is not an absolutely decisive
question for the managers. The position, role, and function
of the most privileged of all the groups, the finance-capitalists,
are, however, entirely bound up with capitalist property and
economic relations, and their preservation is decisive for even
the continued existence of this group. This holds in genera!
and cannot help aflfecting the situation with respect to more
specific problems.

For instance, from the point of view of the technical position
of the managers, the problem of unemployment is perfectly
easy to solve : if the technical co-ordination and integration
of industry were extended, unemployment could be wiped
out in a month. Moreover, the managers, or many of them,
are aware that unless mass unemployment is wip^ all

86

WHO ARE THE MANAGERS?

privileges, including their own, will be wiped out, either
through national defeat by a nation which has wiped it out
or by internal chaos. But mass unemployment cannot be
eliminated without invading and finally abolishing capitalist
property and economic relations. The position of the
managers thus forces them toward solutions which would
have such an effect. But the finance-capitalists (and even
the executives, for that matter) are differently situated. Their
position, depending on the capitalist relations, thereby depends
also on the continuance of mass unemployment ; they cannot
entertain any solution that has a chance of eliminating un-
employment without involving at the same time their own
elimination. (If they think they can, they are simply mistaken,
as they are beginning to find out in Germany and will before
long find out elsewhere.)

3. A third source of conflict is found in what we might
call occupational bias,’^ a point to which we shall return
later. The different things which these different groups do
promote in their respective members different attitudes,
habits of thought, ideals, ways and methods of solving prob-
lems. To put it crudely : the managers tend to think of
solving social and political problems as they co-ordinate and
organize the actual process of production ; the non-managerial
executives think of society as a price-governed profit-making
animal ; the finance-capitalists think of problems in terms of
what happens in banks and stock exchanges and security
flotations ; the little stockholders think of the economy as
a mysterious god who, if placated properly, will hand out
firee gifts to the deserving.

♦ 41

But there is a more basic deficiency in the analysis of Berle
and Means or any similar analysis. The truth is that, what-
ever its legal merits, the concept of the separation of owner-
ship and control ’’ has no sociological or historical meaning.
jQjwnership mans control ; if there is no control, then there
is no o\raership. The central aspects of the control which
is ownership, are, as we have seen, control over access to

87

THE MANAGERIAL REVOLUTION

the object in question and preferential treatment in the
distribution of its products. If ownership and control are
in reality separated, then ownership has changed hands to
the “ control,” and the separated ownership is a meaningless
fiction.

This is perfectly obvious as soon as we think about it. If
I own a house, let us say, that means that — at least under
normal circumstances — I can prevent others from entering it.
In developed societies with political institutions, it means also
that the state (the police in this instance, backed by the
courts) will if necessary enforce this control of mine over
access to the house. If I cannot, when I wish to, prevent
others from entering the house, if anyone else or everyone
has the same rights of entry as I, then neither I nor anyone
would say that I am the “ owner ” of the house. (I can,
of course, alienate my control, either temporarily — through a
lease — or permanently — through sale or gift — but these and
similar acts do not alter the fundamental point.) Moreover,
in so far as there are products of the house (warmth, shelter,
privacy might be so considered, as well as rent) I, as owner,
am, by the very fact of control over access in this case, entitled
to preferential treatment in receiving these products.

Where the object owned takes the form of instruments of
production (factories, machines, mines, railroads . . .) the
situation is the same, only more complicated. For sociological
and practical purposes, the owner (or owners) of the instru-
ments of production is the one (or group) that in fact — whether
or not in theory and words — controls access to those instru-
ments and controls preferential treatment in the distribution
of their products.

These two rights (control of access and preferential treat-
ment in distribution) are fundamental in ownership and, as
we have noted, determine the dominant or ruling class in
society — ^which consists simply of the group that has those
rights, or has them, at least, in greater measure than the
rest of society, with respect to the chief instrumoits of
production.

Moreovw, historical experience shows (as would be obvioUs

88

WHO ARE THE MANAGERS?

without much experience) that these two rights are inter-
related and that the first (control of access) is determinative
of the second. That is to say : the group or groups which
have control over access to the instruments of production
will, as a matter of experienced fact, also receive preference
in the distribution of the products of those instruments. Or
in other words : the most powerful (in terms of economic
relations) will also be the wealthiest. This docs not apply
to every separate individual concerned ; and there may be
a temporary dislocation in the relationship ; but to groups,
and over any period of time beyond a comparatively few
years, it seems to apply always. Social groups and classes
are, we might say, “ selfish ’’ ; they use their control to
benefit primarily (not necessarily exclusively) themselves.

Berle and Means are therefore inconsistent, or at least
incomplete, when they speak of ‘‘ the separation of ownership
and control.’^ Those who control are the owners. The fact
is that all four groups we have dealt with share at least to
some degree in control : at the least they all control prefer-
ential treatment in the distribution of the products of the
instruments of production, which is enough to constitute
them owners ; though in the case of the bulk of the stock-
holders, who have this control to a minor extent and none
of the more decisive control over access, the ownership is
of a very subordinate kind.

But if we re-interpret the phrase “ separation of ownership
and control ’’ to mean “ separation of control over access
from control over preferential treatment in distribution ” —
and this is partly what lies back of the Berle and Means
analysis — then we are confronted with a fact of primary
importance. It is true that a partial separation of this kind
has been taking place during recent decades. Income and
power have become unbalanced. Those who receive the
most preferential treatment in distribution (get the biggest
relative share of the national income) have, in differing
degrees in different nations and different sections of ^ the
economy, been losing control over access. Others, who do
not receive such a measure in preferential treatment in

89

THE MANAGERIAL REVOLUTION

distribution, have been gaining in the measure of control over
access which they exercise. Historical experience tells us
that such a lack of correlation between the two kinds of
control (the two basic rights of property) cannot long endure.
Control over access is decisive, and, when consolidated, will
carry control over preferential treatment in distribution with
it : that is, will shift ownership unambiguously to the new
controlling, a new dominant, class. Here we see, from a
new viewpoint, the mechanism of the managerial revolution.

90

VIII

THE MANAGERS MOVE TOWARD
SOCIAL DQMINANCE

TPhe contention of the last chapter that control
over the instruments of production is everywhere undergoing
a shift, away from the capitalists proper and toward the
managers, will seem to many fantastic and naive, especially
if we are thinking in the first instance of the United Spates.
Consider, it will be argued, the growth of monopoly in our
time. Think of the Sixty Families, with their billions upon
billions of wealth, their millions of shares of stock in the
greatest corporations, and their lives which exceed in luxury
and display anything even dreamed of by the rulers of past
ages. The managers, even the chief of them, are only the
servants, the bailiffs of the Sixty Families. How absurd to
call the servant, master !

Such would have been the comment — except, perhaps, of
a few in a few small towns — Florence, Genoa, Venice, Bruges,
Augsburg — if anyone had in the early fifteenth century been
so much a dreamer as to suggest that control was then shifting
from the feudal lords towards the small, dull, vulgar group
of merchants and traders and moneylenders. Consider, it
would have been argued, the splendid, insolent dukes and
barons and princes, with their shining armour and their
castles and clouds of retainers, and the land, all the land,
in their grasp. Merchants, moneylenders ! they are only
purveyors to me mighty, fit to provide them with the luxuries
required by their station and occasionally to lend them a
few despised ducats for provisioning an army or building a
new fortress.

Yet, only a century thereafter (and change is more rapid

91 o

THE MANAGERIAL REVOLUTION

now; the social heirs of those merchants and traders and
moneylenders were, with their ducats, deciding the succession
to thrones, the elections of emperors and popes, the winning
of wars, the signing of peace. Within a century their social
domination, though not yet consolidated, was assured. Yes,
even the broad lands of the barons were passing into their
hands as mortgages were foreclosed or as desperate lords
strove hopelessly for the money they did not have and without
which in the new age they could not even feed their children.

We must not anticipate. A process which is in midcourse
is not finished. The big bourgeoisie, the finance-capitalists,
are still the ruling class in the United States ; the final control
is still in their hands. But we must not view the world too
narrowly nor limit our eyes to the surface. For it is a world
process with which we are dealing, since capitalism is a world
system : the United States is linked economically, socially,
culturally, and, most dramatically of all (how well we know
this to-day !), strategically with all the world. And the process
goes all the way to the roots of society ; it does not remain
merely on the outer layers. If we lift our eyes to the world
arena and sink them to the roots, we will see what is there :
that the capitalists, the ruling class of modem society, are
losing control, that the social structure which placed them
in the position of ruling class is being transformed, not to-
morrow, but now, as we watch. In the new structure, when
its foundations are completed, there will be no capitalists.

We have seen that the rise to power and domination of the
bourgeoisie meant, first of all, the progressive reduction of
greater and greater percentages of the instruments of produc-
tion to capitalist economic relations — that is, control by and
in the primary interests of the capitalists instead of the feudal
ruling dass. This increase of percentage meant either putting
on a capitalist basis areas of production which had been on
a feudal basis, or, equally wdl, opening up, along capitalist
lines, areas of production which had not existed under feudal-
ism. (Either devdopment was an increase in the total
percentage of production under capitalist control.) ,

There was still another variable (though mca-e difiScult to

98

MOVE TOWARD SOCIAL DOMINANCE

measure) in this process of the extension of capitalist control :
namely, the degree to which a given section of production
was subject to capitalist relations. For example, so long as
feudal lords, making use of the Church doctrine against
usury, could repudiate loans and refuse to honour pledges
they had made on loans and get away with it, the business
of loaning was not fully capitalist in character ; or, similarly,
with guild and serf restrictions interfering with the wage-
relation between capitalist and worker ; or feudal “just
price ” conceptions blocking free exchange of commodities
on the market ; etc. The extension of capitalist control was
also indicated by the progressive overcoming of all such
restrictions on the capitalist mode of economy.

We have also seen that, from one point of view, within the
economic sphere the extension of capitalist control went on
steadily and continuously, with scarcely an interruption.
From the latter part of the Middle Ages on, virtually every
decade found a higher percentage of the economy capitalist
than had been the case during the preceding decade. Indi-
vidual capitalists were wiped out, true enough, either by
other capitalists, or often by feudal lords — nearly every great
financier was ruined in the state bankruptcies of the latter
part of the sixteenth century, for example. We are not,
however, concerned with the fate of individual members of
a class. The capitalists who were wiped out were not replaced
by feudal lords or officials but by other capitalists.

At certain times, moreover, the extension of capitalist
control was not slow and steady but sudden and large-scale.
These times were in conjunction with wars, international,
colonial, and civil. As the economic historian of the Re-
naissance, Richard Ehrenberg, puts it : “ Political effects
tend to be catastrophic, as opposed to the slow, almost im-
perceptible action of economic forces and interests ”

The turning point in capitalist control over the economy
was reached during the first world war (this is why I selected
the date, 1914, as that of the beginning of the social transition
from capitalist to managerial society.) The curve of the
extension capitalist control, which had risen vdthout

93

THE MANAGERIAL REVOLUTION

interruption from the fourteenth century, abruptly broke down-
ward and has sunk continuously ever since, heading swiftly
toward zero. When once it is brought to our attention and
when we think of it in terms of the world arena, this shift
in control over the instruments of production away from the
big capitalists, which has gone on since the beginning of the
first world war, cannot possibly be denied, even from the most
obvious point of view. All of Russia, one-sixth of the earth's
land surface, was taken out of capitalist hands during the
course of the war. In Italy and especially in Germany
(because of its advanced technology and equipment far more
decisive than Russia) and in what Germany conquers, capitalist
control is plainly headed toward extinction. Russia and
Germany will, however, occupy us in some detail later. In
the present chapter, let us consider the situation in the United
States, where the process with which we are dealing has
gone a shorter distance than in any other major nation,

S|e ♦ 3|(

In so far as the United States is capitalist, this means that
control over the instruments of production is held by those
who have capitalist property rights in those instruments.
Historically and legally in the United States, this, in turn,
means, above all, the few hundred great families (“ the Sixty
Families,” as Ferdinand Lundberg called the chief of them
in his book which took its title from that phrase) who, in
point of fact, have in the form of stock and other ownership
certificates much greater legal capitalist ownership rights
than any other group.

There can be no question to-day about the control over
preferential treatment in distribution which is possessed by
these families. The funds available to them are colossal in
relation to their small numbers. In spite of much that is
written and said on the subject, probably few outside their
ranks reaUy comprehend the scale of luxury on which many
of them tve, a scale exceeding anything known before in
history.

Nevertheless, we have seen that of the two decisive dements

94

MOVE TOWARD SOCIAL DOMINANCE

in actual ownership, control over preferential treatment in
distribution is subordinate to control over access. With
respect to the latter, though it is by no means yet out of the
hands of the big bourgeoisie, though it can still be exercised
by them on crucial occasions, it has on the whole been
diminishing during the past generation.

This is indicated in one very interesting and important way
by a phenomenon which might be called the withdrawal of
the big bourgeoisie from production. The big capitalists,
legally the chief owners of the instruments of production,
have in actual life been getting further and further away
from those instruments, which are the final source and base
of social dominance. This began some time ago, when most
of the big capitalists withdrew from industrial production to
finance. At first this shift to finance (which was well under
way by the turn of this century) did not mean any lessening
of control over the instruments of production : rather the
contrary, for through finance-capitalist methods a wider area
than ever of the economy was brought, and was brought
more stringently, under the control of the big capitalists.
Nevertheless, the control necessarily became more indirect,
exercised at second or third or fourth hand through financial
devices. Direct supervision of the productive process was
delegated to others, who, particularly with the parallel develop-
ment of modem mass-production methods, had to assume
more and more of the prerogatives of control — for example,
the all-important prerogative of hiring and firing (the very
heart of “ control over access to the instruments of produc-
tion ”) as well as organization of the technical process of
production.

But the big capitalists did not stop their withdrawal at the
level of finance. We find that they have more and more
withdrawn, not merely from production proper, but from
active and direct participation of any sort in the economic
process. They spend their time, not in industry or even in
finance, but on yachts and beaches, in casinos and travelling
among their many estates ; or, others of them, in charitable,
educational, or even artistic activities. Statistics on such a

95

THE MANAGERIAL REVOLUTION

point are difficult to get ; but it is safe to say that a sub-
stantial majority of the members of the first Sixty Families
listed by Lundberg has withdrawn from any serious direct
active contact with the economic process. To rule sodety,
let it be remembered, is a full-time job.

The point is emphasized by reflecting how much (it is
often estimated at more than a half) of the wealth and legal
ownership possessed by the big capitalists is now registered
in the name of women. Such registration is often a legal
device to aid in the preservation of the wealth, but it marks
again the gap between the legal owners (in the capitalist
sense) and the instruments of production : whatever the
biological merits, it is a fact that women do not play a serious
leading role in the actual economic process.

We are not interested in the moral side of this withdrawal ”
of the big capitalist families. Differing moral criteria can be
found to label their lives to-day as either more wasteful and
parasitic or more enlightened than those of their predecessors.
What interests us are the social implications, now and for
the future, of this withdrawal. One consequence of the with-
drawal is necessarily the assumption of more and more power
over the actual processes of production, more and more of
the time, by others than the chief legal owners of the instru-
ments of production, in many instances by those whom we
call the managers.

It could not be otherwise. Somebody is going to do the
actual managing ; and, the way things have happened, as
the big capitalists do less of it, the managers have been doing
more. Of course, as the situation still is in the United States,
the power of the managers is still far from absolute, is still
in the last analysis subordinate to that of the big capitalists.
The big capitalists and the institutional relations of capitalism
continue to provide a framework within which the managers
must work : for example, in determining the raising or lower-
ing of production output, the large-scale financial operations,
the connectians between different mpts of industry, and so
on. The big capitalists intervene at occasional key moments
that affect the broad directions of major policies. They keq>»

96

MOVE TOWARD SOCIAL DOMINANCE

as a rule, a kind of veto right which can be enforced when
necessary by, for example, getting rid of any rebellious
managers. The managers remain in considerable measure
delegates servants of the big capitalists.

Such a delegation of power and control is, however, highly
unstable. It has always happened that servants who discover
themselves to be solidly enough established gradually turn on
their masters, especially if they wake up to the fact that their
masters are no longer necessary to them. Under the Mero-
vingian kings of France in the Dark Ages, the Mayor of the
Palace was originally the mere vulgar chief of the court
servants. Gradually the actual control of administration got
into the hands of the Mayors of the Palace. But, for several
generations thereafter, the Merovingians, becoming more and
more mere puppets, were kept as kings and lived with all the
outward signs of kingship. The final act of doing away with
them, which took place when the Mayor who was the father
of Charlemagne proclaimed himself king, simply put in a
formal way what had already happened in sociological reality.

The instruments of production are the seat of social domina-
tion ; who controls them, in fact not in name, controls society,
for they are the means whereby society lives. The fact to-day
is that the control of the big capitalists, the control based upon
capitalist private property rights, over the instruments of pro-
duction and their operation is, though still real, growingly
tenuous, indirect, intermittent. More and more of the time,
over more and more phases of the productive process, no
capitalist intervention appears. In another transition age,
feudal lords, on harsh enough terms, leased out towns or lands
to capitalists, who conducted capitalist operations with them
in place of the feudal operations which the lords had before
then directed. The lords remained lords and lived like
lords ; they had, seemingly, controlling rights, could throw
out the capitalists at will and bleed them for even more
returns than the contracts called for. But, somehow, after
a while, it was the capitalists who had the town and the land
and the industry, and the lord who was left with a long ancestry
and noble titlcs~and an empty purse and vanished power.

97

THE MANAGERIAL REVOLUTION

Throughout industry, de facto control by the managers over
the actual processes of production is rapidly growing in terms
both of the aspects of production to which it extends and the
times in which it is exercised. In some sections of the economy
the managerial control is already fairly thorough, even though
always limited indirectly by big capitalist control of the banks
and finance. Though the Berle and Means conception of
‘‘ management-controlled ” corporations fails, as we have seen,
to clarify what is meant by management and how manage-
ment is related to finance, yet there are many corporations,
and these form among the greatest, not the secondary, where
the managers in our sense are quite firmly entrenched, where
owners, in the legal and historical capitalist meaning, have
scarcely anything to do with the corporations beyond drawing
dividends when the managers grant them.

But it might be asked : assuming that this development is
taking place, does it not mean simply that the old big bour-
geois families are on their way out of the front rank and new
persons are about to take their places ? This has happened
many times before during the history of capitalism. The
survival of capitalism, as we have seen, does not depend upon
the survival of any given individual capitalists, but of a ruling
capitalist class, upon the fact that the social place of any
individual capitalists who are eliminated is taken by other
capitalists. This was what happened before, and outstandingly
in the United States. If the old and wealthiest capitalists are
slipping, then, it would seem, the newer managers will utilize
their growing power to become the new members of the big
houTgeoide.

However, in spite of the fact that many of the managers
doubtless have such an aim as their personal motivation, it
will not happen. In the first place, vnih the rarest exceptions,
it is no longer possible for the managers to realize such an aim,
even if they have it. The chance to build up vast aggregates
of wealth of the kind held by the big bourgeois families no
longer exists under the conditions of contemporary capitalism*
Lundberg shows that since the end of the first world war
there has been only a single change in the listing of the first

98

MOVE TOWARD SOCIAL DOMINANCE

Sixty Families in this country ; only a single new-comer has
penetrated that stratum (and this closing of the doors to the
top rank occurred much later in the United States than in
the other great capitalist nations). The inability of a ruling
class to assimilate fresh and vigorous new blood into its ranks
is correctly recognized by many sociologists as an important
symptom of the decadence of that class and its approaching
downfall.

In addition, however, because of the structural changes
within society, the future road toward social domination and
control no longeir lies in the massing of personally held capitalist
property rights. Not merely is getting these rights on a big
scale nearly impossible for new-comers, but also, if the aim is
gi eater social domination and privilege, there are now and
for the future more effective means for achieving the aim.
Wiih capitalism extending and ascendant, individual capitalists
together making up the ruling class, are, when they disappear,
replaced by other individual capitalists. With capitalism
collapsing and on its way out, the ruling capitalist class as a
whole is being replaced by a new ruling class.

This need not mean (though it may) that those same indi-
viduals who are at present managers under capitalism will
comtitute that new ruling managerial class of the future.
Very few of the leading capitalist families of the sixteenth
century survived to become part of the ruling capitalist class
of later generations. If the present managers do not them-
selves constitute the new ruling class, then other individuals
will. But the other individuals will do so by themselves
becoming managers, not capitalists, because the new ruling
class will be the managerial class.

******

So far we have been considering the weakening of control
by the big bourgeoisie and the increase of control by others,
in particular the managers, within the field of what is usually
called “ private enterprise,” the field of capitalist economy
proper. The process is strictly analogous to what happened

99

THE MANAGERIAL REVOLUTION

in the transition from feudalism to capitalism : in a con*
stantly growing section of the total economy, control by the
previously established ruling class diminishes, and control by
another class is extended.

The somewhat blurred outlines of the picture so far drawn
are at once sharpened when we extend our view from private
to governmental (state) enterprise. The rapidity with which
the economy is being removed from control by capitalists —
that is, from organization in terms of capitalist economic
relations — is unmistakable as soon as we pay attention to the
role of government. Here, too, the example of the United
States is all the more remarkable because in this country the
development has gone much less far than anywhere else.

In capitalist society, the role of government in the economy
is always secondary. The government acts in the economy
chiefly to preserve the integrity of the market and of capitalist
property relations, and to give aid and comfort, as in wars
or international competition or internal disturbances, where
these are needed. This we have noted in describing the
general features of capitalist society. This restriction in
the government’s sphere of activity — whatever the form of the
government, dictatorial or democratic, in the political sphere
— is not a coincidence, but, it must be stressed again, an
integral part of the whole social structure of capitalism.
Capitalist economy is a system of private ownership, of owner-
ship of a certain type vested in private individuals, of private
enterprise. The capitalist state is therefore, and necessarily,
a limited state.

The traditional and necessary capitalist role of government
is, as everyone knows, now being quickly abandoned in all
nations, has been altogether abandoned in at least one (Russia),
and close to abandoned in several others. Government is
moving always more widely into the economy. No matter
who runs the government or for what, every new incursion
of government into the economy means that one more section
of the economy is wholly or partially removed from the rdgn
of capitalist economic relations.

That this is the meaning of the governmental cxfrmsaons

100

MOVE TOWARD SOCIAL DOMINANCE

into the economy can be seen from one very simple and
obvious fact alone : All capitalist enterprises are run for
profit ; if, over a period, they do not make a profit, they have
to stop running. But governments not only do not have to
make a profit, but on the contrary normally and properly run
in the contemporary world at what is from the capitalist
point of -view a loss. When governments confined themselves
to the narrower political sphere — army, police, courts, dip-
lomacy — this might not have seemed so out of line (though
in those days governments ran continuously at a loss only
at the cost of going bankrupt, like any other capitalist institu-
tion) : it could be thought that the government was a special
expense chargeable to business like the private police force
of a steel mill or the public relations department of a utilities
firm. But when we remember that government is now the
biggest business of all, in the strictly economic as well as in
other spheres, the demonstrated ability of government to keep
running at a loss is intolerable from the standpoint of capitalism,
and shows that the government functioning in the economy
is implicitly a non-capitalist institution.

The government extension into the economy is of two kinds ;
First, government takes over fully, with all attributes of owner-
ship, section after section of the economy both by acquiring
already established sections and by opening up other sections
not previously existing. There is little need to give examples :
postal service, transportation, water supply, utilities, bridges,
ship-building, sanitation, communications, housing, become
fields of government enterprise. Among new fields that are
opened up by government are such vast potential areas as
what this country calls “ conservation work ” in order to
hide the fact that it is a necessary part of contemporary
economy.

What must be stressed is how much greater the area of
government enterprise already is, even in the United States,
than we commonly wish to recognize. It doesn’t make any
difference if we call WPA and GGC “ relief,” or biological
and agricultural and meteorological surveys “research,” or
food stamp plans “ distribution of surplus,” or ash and garbage

101

THE MANAGERIAL REVOLUTION

removal municipal services ” ; they are all, in the con-
temporary world, part of the total economic process. For
that matter, education may also be treated as an economic
institution, and is, except for a negligible fraction, a govern-
mental enterprise ; and government, either directly or through
subsidy, provides about half of the medical care in the United
States. The immediate bureaucracy of the federal govern-
ment includes over a million persons, double the number of
a decade ago ; but if we include the employees of state,
county, and municipal governments, the army, navy, courts,
prisons, the recipients of all types of relief, we find that already
in the United States half or more of the entire population is
dependent wholly, or in determining part, upon government
for the means of living.

An equally striking symptom of the altered weight of govern-
ment in the economy as a whole is provided by the figures
for new capital investment. The ability of capitalism to handle
the problems of the economic process was shown perhaps most
accurately by the always-accumulating amounts of new capital
investment, which indicated extensions of the capitalist eco-
nomic area. During the past seven or eight years, however,
new capital investment in private enterprise has been almost
eliminated, the annual amounts totalling only a few hundreds
of million dollars, while vast idle funds have piled up in the
banks. This does not mean that new investment has not
taken place. It has done so through government, and in
state enterprise, where it is in effect measured by the increase
in the national debt. Federal government investment during
these years has totalled more than five times private invest-
ment, a plain enough signal where the economic future lies.

Outright acquisition by government of rapidly increasing
areas of the economy is, however, only one phase of the
process. Still more striking, and far more extensive in range,
is the widening control by government of more and more
parts and features of the economy. Everyone is familiar with
this control, administered by the long list of commissions
and bureaus and alphabetical agencies. There is control, to
one or another extent, of agriculture and security issues,

toa

MOVE TOWARD SOCIAL DOMINANCE

advertising and marketing practices, labour relations and
utility rates, exports and imports, wages and banking rules.
... In this matter of control without full ownership, also,
the United States is far behind every other great nation ;
but even in the United States it has gone a long distance,
and there is every reason to expect a vast speedup during the
next immediate period. Nearly every one of these govern-
mental controls imposes restrictions upon capitalist property
rights, removes the objects and functions controlled to a
greater or less degree from the unmixed reign of the market
and capitalist property relations.

The actual, day-by-day direction of the processes owned
and operated by the government or controlled, without full
ownership, by the government is in the hands of individuals
strictly comparable to those whom we have called “ managers
in the case of private industry : the men of the innumerable
bureaus and commissions and agencies, not often the publicly
known figures, who may be decorative politicians, but the
ones who actually do the directing work. In government
enterprise we have, in fact, the development outlined in the
preceding chapter. Groups 3 and 4 (the finance capitalists
and the stockholders) disappear ; and Group 2, with the
executive functions stripped of profit-making, merges into the
managerial Group i . Direction is not in the hands of capitalists,
nor does a directing position depend upon the possession of
capitalist property rights in the instruments of production
involved. Under present conditions in the United States it
is true that the governmental managers do not have altogether
free rein ; but the process of the extension of governmental
ownership and control nevertheless means a continuous
increase of managerial dominance in the economy as a whole.

A clear witness to the truth of this \ast observation is pro-
vided by the growth in the number of “ bright young men,"*
of trained and educated and ambitious youth, who set out
for careers in the government, not as politicians in the old
sense, but as managers in the various agencies and bureaus
in all the myriad fields where they now operate. A generation
ago these young men would almost all have been headed for

105

THE MANAGERIAL REVOLUTION

private enterprise, with the goal of making a name for them-
selves in business, industry, or finance, and perhaps of finding
a place in the charmed ranks of the upper bourgeoisie. More
and more of them understand now that security, power, or
simply the chance to exercise their talents are not to be found
in the old ways, but must be sought elsewhere. The young
men thinking and acting in this v/ay include, significantly
enough, many of the children of the capitalists themselves,
who perhaps sense that the dominion exercised by their parents
as capitalists can be continued by the children only dbrough
giving up capitalism.

««****

I have been presenting so far only one side of this process ;
the process whereby, within the still-existing structure of
capitalist society, ever greater percentages of the economy are
getting wholly or partly out of control by the capitalists and
subjection to capitalist relations, and coming under the control
of new groups and new relations — ^in particular of the managers
and relations suitable to the social dominion of the managers.
Capitalists and capitalist relations do not, however, simply
evaporate in the face of this process. They resist it, and,
when resistance at any point gives way, try to turn what has
happened to their own advantage. In the next chapter we
shall consider, among other things, why in the long run this
resistance and the capitalist attempt to make use of the process
win break down.

Here it remains to sum up once more the general meaning
of the process. Marx once wrote that the basis of bourgeois
domination was first built up “ within the womb of the old
(feudal) society.” Thus, when the great political tests of war
and revoluticHi came, the battle was really decided in advance ;
the capitalists and capitalist relations had won out in the
preparatory period. We have seen that the inability of the
proletariat and the propertyless masses generally to build up
in an analogous manner social dominion “ within the womW ”
of capitalist society is one of the crucial reasons why socialism
will not succeed capitalism.

104

MOVE TOWARD SOCIAL DOMINANCE

However, disintegration of the social domination (that is,
control over the instruments of production) of the capitalists
is nevertheless going on within the very womb of capitalism,
and domination by new groups, above all by the managers,
is growing. On the world arena, which is the arena of modern
society, the percentage of the economy controlled, as well as
the completeness of the control, by the capitalists and capitalist
social relations are alike diminishing at a rate which has
rapidly increased since the first world war. It is the managers,
with their allied or to-be-allied political associates, who are
taking up the control as it slips from the capitalist grasp.
This is not a shift scheduled for to-morrow. It began yesterday,
continues to-day ; and the only element of prediction lies in
expecting it to be completed to-morrow.

The social revolution of to-day is not the revolution of the
end of the Middle Ages, of the transition from feudalism to
capitalism. There is no identity between what happens now
and what happened then. But the decisive analogies between
the two transition processes are just. The past in this case is
able to teach us, if we wish to learn, what is happening and
what is going to happen.

105

IX

THE ECONOMY
OF MANAGERIAL SOCIETY

In the last chapter i held that the extension of
government (state) ownership and control (an extension no
one could possibly deny, nor, especially if we are considering
world economy, expect to be anything but speeded in the
future) was, in its historical meaning, a decrease in capitalist
ownership and control. This development is, in turn, part
of the general process of social transition which is taking place,
a process analogous to what happened in the transition from
feudal to capitalist society. Through this process, the rate
of which is markedly accelerated by war and revolution, I
maintain that the position of the capitalists as the ruling
class in society is being undermined and, before long, will
collapse.

There are many who will agree with this interpretation of
the growth of governmental ownership and control. Marxists,
however, particularly Marxists of the Leninist wing (now
represented by Stalinists and Trotskyists), will deny it ; as
will also, for very different reasons, many of the New Dealer
type in this and other countries, who claim, when their own
advocacy of the extension of government ownership and
control is challenged, that, far from destroying capitalism, it
helps to preserve it. I wish to analyze here the argument of
the Leninists.

The contemporary state, say the Leninists, is “ the executive
committee of die bourgeoisie,’* the political agency for enforcing
the capitalist rule of society. Therefore, when this state takes
over some branch of the economy, or establiihes economic
controls, capitalist rule is in no way weakened->-4t is. the

106

ECONOMY 07 MANAGERIAL SOCIETY

capitalists’ own state which does the taking over. On the
contrary, capitalist rule is usually strengthen^ thereby.

Nothing could be simpler than this supposed demonstration.
However, the whole show is given away when we compare the
argument with a basic policy that is always abo held by
Leninists, as by all Marxists : the policy, namely, of advocating
at all times that the government shall take over any and all
parts of the economy.

Leninists, it is true, likewise say that what they want is a
new government — a new state — which will be not the present
“ capitalist state ” but a “ workers’ state ” ; and that govern-
ment ownership will not “ really ” be in the interests of the
masses and of socialism imtil such a new state is set up. It
would seem, then, that they ought to wait for the arrival of
such a workers’ government before advocating government
ownership and control. But this is not the case. They
advocate that the present government, the executive committee
of the capitalists, take over ownership and control. That is,
they advocate what is, according to their ostensible theory, a
measure which in no way weakens but on the contrary usually
strengthens the social rule and domination of the capitalists
and of capitalist social relations.

In this case as in so many others, practical politics arc a
better touchstone than theory. The truth is that the practical
step of extending government ownership and control acts,
in its longer-term effects, to weaken and finally do away with
capitalism and capitalist rule. Leninists are against capitalism,
and they act consistendy, even if they do not thirJc consistently,
by advocating on all occasions this practical step. It would
be forbidden by a strict interpretation of their theory. But
the theory is part of an ideology ; ideologies are not subject
to the canons of science and logic ; and with the help of
“ dialectics ” — which arc from one point of view simply a
device for reconciling theoretical contradictions with the
dictates of practice — the theory is adapted to the practical
need.

In this respect the Leninists arc the exact converse of the
capitalists ; and the attitude of the capitalists is no less

107 H

THE MANAGERIAL REVOLUTION

revealing. Ninety-nine times out of a hundred, the over-
whelming majority of capitalists are, at the outset, against any
and every extension of governmental ownership and control
of the economy. They speak, write, and act against it, and
get others (teachers, editors, ministers) to speak, write, and
act against it. When it comes anyway, they adapt themselves,
or try to adapt themselves, to it ; but they oppose its coming.
Capitalists are for capitalism ; and their practical policy,
whatever theories accompany it, follows from their position
and interests. They are against the extension of govern-
mental ownership and control because, like the Leninists,
they rightly sense that, in the long run if not at once, it is anti-
capitalistic in its historical effects.

The historically anti-capitalist nature of the extension of
governmental ownership and control is the only basis from
which we can plausibly explain the attitude of the capitalists
themselves. Leninists are forced to the most complex and
devious psychological fairy tales to get around the difficulties.
When the capitalists, almost en masse y object, say, to some New
Deal extension of the government into the economy, the
Leninists are compelled to say that the capitalists, with their
complaints, are only trying to “ deceive ” the people or are
deceiving themselves about ‘‘ their own best interests.’^ Such
explanations are logically possible but most unlikely, especially
when there is a simpler one that fits the facts directly : the
capitalists object because the measures are against their interests.
Let us examine more carefully what happens :

We have already discussed the sense in which the Leninist
theory of the state is correct, the sense in which it is per-
missible to speak, with proper caution, of the state in modem
capitalist society as a capitalist state, as the state of the capitalists.
Fundamentally this need mean only (though it may mean
more than this) that, on the whole, most of the time and on
the most dc^sive occasions, the state acts (through laws,
courts, police, and so on) to uphold the general framework of
capitalist social and economic relations : this is all that is
necessary for the preservation of Capitalism, since, given those
relations, capitalim continues and the capitalists continue as

xo8

ECONOMY OF MANAGERIAL SOCIETY

the ruling class. When the state acts to enforce contracts or
debt payments or to stop sit-down strikes (which negate the
capitalist control of access to the instruments of production),
the state may be described, somewhat metaphorically, as the

executive committee ” of the capitalists. There is little
doubt that the government (state) of the United States has
been and may still be correctly described as a ‘‘ capitalist
state.”

But we have also seen that, when the government takes over,
either in full ownership or in some degree of control, some
section of the economy, by that very fact that section of the
economy is removed, entirely or partly, from the reign of
capitalistic economic relations. That section of the economy
is no longer in the full capitalist sense a “ profit-making
institution,” with the profits going in one way or another to
individuals who have one or other form of “ property right ”
in the given institution. The products (goods or services) of
the state institution are not subject to the “ laws of the market.”
They are not even, or do not need to be, ‘‘ commodities ” in
the capitalist sense. Nor is the distribution of these products
determined by capitalist property relations.

This is why most capit^ists invariably oppose such acquisi-
tions by the government. The situation here is entirely
diflferent from what it is when the government acts in the
limited political sphere which is proper to a well-behaved
capitalist government. When the government exercises police
power, raises or lowers tariffs, goes to war or stays at peace,
convicts or acquits a capitalist for some private economic
offence, some (perhaps most) capitalists will object, others
will approve ; but none will raise a question ‘‘ of principle,”
and there will seldom be a unified capitalist opinion on the
matter. The measures may hurt some given group of capitalists
and benefit others, may even hurt all capitalists ; but they do
not abridge the basic rights of property — control of access to
the instruments of production and preferential treatment in
the distribution of the products of those instruments — and they
arc consequently incidental to the main question of social
structure and rule. The direct economic incursions of the

J09

THE MANAGERIAL REVOLUTION

government do, precisely, abridge or even eliminate those
rights with reference to the section of the economy in question ;
they are therefore intolerable, so far as they go, incompatible
with capitalism.

The capitalists oppose the economic incursions at the outset.
When, nevertheless, for whatever reason, the incursions take
place, the matter is not then ended. The capitalists, though
they have lost ground, try to turn the loss to their advantage ;
and they are aided in the attempt because the government
remains, on the whole, capitalist. For example : The govern-
ment, through PWA or WPA or some similar agency, begins
to build schools and apartments and roads and bridges. To
the extent that this is fully a governmental enterprise it is out
of the capitalist economy, and running it is not yielding
capitalist profits to individual capitalists. But the capitalists
can still turn it to capitalist advantage by supplying the
materials that are used for the building (the materials still
being turned out by capitalist enterprises), by selling the
“ relief workers ” food and clothes paid for by the govern-
ment wages, or by making profits from sub-contracting where
the government does not directly operate the work. The
TVA can make electricity as a state enterprise ; but, once
made, a private capitalist concern can distribute the current,
or a private capitalist factory can be built in the district to
use its cheap rates. Again, it often happens that the section
of the economy which the government takes over is one that
private capitalists can no longer run except at a loss : the
governmental incursion in such a case gets rid of the loss
suffered by the individual capitalists — ^which is possible, if for
no other reason, because the government does not have to
run at a profit.

Considerations such as these would seem to justify the
Leninists (their theory, not their practice). Governmental
incursions into the economy seem, in their light, not to weaken
but usually to improve the position of the capitalists and of
capitalism. This impression, however, disappears as soon as
wc turn from the frequent immediate effects to the full historical
implications of the process.

no

ECONOMY OF MANAGERIAL SOCIETY

The capitalists, for a long time, arc able to make up for each
separate loss, even often to seem to gain after it ; but they do
so only by exhausting their own resources. They operate
further and further from shore, but meanwhile their own
base is progressively narrowed. It is like a poker player, with
a great pile of chips, covering and raising each bet of his
opponent ; the opponent meanwhile is getting his chips by
sneaking them from the bottom of our player’s pile. When
the pile is big, the game can go on for a long time, but in the
end there is no doubt about the victor.

Put it this way : The capitalists, as a class, base their power ^
and privilege, their social dominion, on their control (owner-
ship) of “ private enterprise,” which alone is capitalist enter-
prise proper, since in it alone do we find the characteristic
capitalist social and economic relations. So long as govern-
ment enters, either not at all or comparatively little, into the
economy, and at the same time is either tolerant toward or
the active defender of capitalist relations, the social rule of
the capitalists and the continuance of capitalist society is
assured and often immensely aided by government. Even
when government takes over substantial but still minor per-
centages of the economy (either through outright ownership
or growing but not complete control), the social rule of the
capitalists can be continued, and government can still act
primarily to their benefit. The capitalists will not benefit
directly from governmental enterprise. But, having private
enterprise as a base for leverage, governmental enterprise can
be indirectly manipulated to benefit private enterprise and thus
the capitalists.

This is simple enough when the relative percentage of
governmental enterprise is low and that of private enterprise
correspondingly high : private enterprise then easily outweighs
governmental. But, especially since the first world war, the
universal tendency, in the world economy as a whole and in
that of each separate nation, is toward the relative extension
of governmental enterprise at the expense, necessarily, of
private. (Once again 1 must stress that such an extension is
marked is much or even more by an increase in governmental

III

THE MANAGERIAL REVOLUTION

control as by formal government “ ownership ” : since control
is the decisive factor in ownership.) This extension takes
place continuously and progressively, just as the relative
extension of bourgeois as against feudal control at the transi-
tion between the Middle Ages and modern times. The rate
of the process is enormously speeded at certain points as in
Russia in 1918, in Germany from 1933 on, and everywhere
by the effects of the second world war. The base of capitalist
leverage is undermined ; the relative weights of govern-
mental and private enterprise alter.

When, finally, the major part of the instruments of produc-
tion come under governmental ownership and control, the
transition is, in its fundamentals, completed. The limited
state ” of capitalism is replaced by the unlimited ” managerial
state. Capitalist society exists no longer or lingers only as a
temporary remnant. Managerial society has taken its place.

The basis of the economic structure of managerial society is
governmental (state) ownership and control of the major
instruments of production. On a world scale, the transition
to this economic structure is well advanced. All the evidence
at ouf disposal indicates that the development will continue,
will, in fact, proceed at a rate much speedier in the future
than that of the past ; and that the transition will be com-
pleted. We may not like this prospect ; we may most bitterly
resent it. But to think that it is not the most probable out-
come is to judge history in terms of our desires and not on the
evidence amply before us.

♦ ♦ ♦ ♦ ♦

What kind of economy will this be ? What will be the
specific economic relations within it ? What group, if any,
within it will hold most power and privilege, will be the
ruling class ?

It would be foolish to pretend that these questions can be
answered in minute detail — the science of history does not, or
should not, lay claim to the precision of physics. Nevertheless,
sufficiently meaningful and accurate broad answers can be

112

ECONOMY OF MANAGERIAL SOCIETY

given. These answers need not be imaginative speculation.
We have evidence, considerable evidence, upon which to base
them : the experiences, namely, of what has already happened
in the transition period. The past, after all, is the only source
of knowledge about the future.

In contemplating an economic organization of society
through state ownership of the major instruments of produc-
tion, other writers have sometimes referred to it as ‘‘ state
capitalism or “ state socialism.” I certainly wish at all
costs to avoid disputes over words. Though I call it the
‘‘ managerial economy ” of managerial society ” I am
perfectly willing to substitute any terms whatever, so long as
there can be a common understanding of what is being talked
about. However, as I wish now to show, the terms “ state
capitalism ” and “ state socialism ” (it is ironic that both are
used) are misleading in the extreme.

If by ‘‘ capitalist economy ” we mean (as we do mean) the
economic structure which has prevailed from the end of feudal
economy until recent years, there is no sufficient resemblance
in any important aspect that would justify calling an economy
of state ownership capitalist.” With this point, without
further argument, I am sure that at least all capitalists would
agree.

Apart from the absence of all those other features of capitalist
economy discussed in Chapter II, you cannot call an economy
of state ownership capitalist, because in it there are no
capitalists. A capitalist is one who, as an individual, has
ownership interest in the instruments of production ; who, as
an individual, employs workers, pays them wages, and is
entitled to the products of their labour. Where would, where
could, such individuals be found in a state economy ? Owner-
ship would be vested in the state as an institution, not in
individuals ; men would “ work for ” the state as an institu-
tion, not for individuals ; the state would control the products
of their labour, not individuals. No individual with money
would be able to use that money for capital to start a business
and make a profit out of that business. What sense could
there be in calling such a condition of affairs “ capitalist ?

113

THE MANAGERIAL REVOLUTION

Tlic term “ state capitalism ” seems to be due to a misunder-
standing which we have already analyzed. When the state
owns only a part, and a minor part, of the economy, with the
rest of the economy remaining capitalist private enterprise, we
might correctly speak of state capitalism ** in connection
with that minor state-owned part : since, as we have seen, the
economy remains in its balance capitalist and even the state-
owned part may be directed primarily to the benefit of the
capitalist party. But the ‘‘ capitalism ” in state capitalism
is derived not from the state-controlled part of the economy
but from the capitalist-controlled part. When the latter dis-
appears, or becomes negligible, then the capitalism has
disappeared. There is no paradox in saying that lo times io%
state capitalism, far from equalling ioo% capitalism, equals o%
capitalism. The multiplication is of state^ not of capitalism.
Though the mathematics would be much more complex, it
would be nearer an analogy to say that, just as io% state
capitalist economy equals only ^o% capitalist economy, so ioo%
(or even 8o% or 70%) state economy would have eliminated
capitalism altogether.

But it is equally deceptive to speak of ‘‘ state socialism.”
According to traditional and historical usage, “ socialism ”
means, so far as economic structure goes, an economically class-
less society. An economically classless society, as we have
discussed, is a society in which no group of men, by virtue of
special social or economic relations, has any special rights of
ownership in the instruments of production — that is, any
special degree of control over those instruments or any special
preference in the distribution of their products. A state-
owned economy might be economically classless. There is no
logical impossibility in its being so. But there is not the
slightest reason for believing that the particular form of state-
owned economy now in the process of development will be
economically classless.

For a state-owned economy to be economically classless, a
situation along the following lines would have to exist ;
Ownership of the instruments of production would be vested
in the state. But control over the state (and thus, indireedy,

114

ECONOMY OF MANAGERIAL SOCIETY

over what the state controlled) would have to be vested in
everyone alike. No gproup or class of society would have any
special advantage as against other groups or classes in con-
trolling the state. This situation, it must be noted, would have
to hold on a world scale ; the natives of China, India, Africa,
and central Brazil would have to have, with respect to control
of state institutions, a position just as favourable as that of the
inhabitants of the industrialized metropolitan centres. Any
important deviation from this world group equality would
constitute the more favoured group or groups a privileged
or ruling class.

It is not my intention to discuss the reasons why such a
situation has no likelihood of coming about within the discern-
ible future. At the very least, it would presuppose the presence
of a superabundance of material and cultural goods for
everyone in the world such as no one could sensibly expect
for an indefinitely long time (especially when we remember
that, as more goods become available, population increases,
and more needs and wants arise : needs and wants are in-
finitely expansible), a general moral attitude of co-operation
and self-abnegation such as no social groups have ever in
history been observed to display, and a degree of intelligence,
scientific knowledge, and education for everyone that can
seem realistic to expect only in a daydream.

But it is not necessary to agree on the reasons. We have
experiences of state ownership, in varying scales, to go by as
well as the conclusions from the general economic trends
which we have surveyed. They show us what we may
justifiably expect. They prove that, though a state-owned
economy might be classless, the form of state-owned economy
which is now developing is, in fact, not classless and not going
to be classless. There will not be a capitalist ruling class —
there could not be — but there will be a ruling class. The
privileged will not be bourgeois, but there will be those with
privilege and those without.

Nevertheless, it may still turn out that the new form of
economy will be called “ socialist.” In those nations — Russia
and Germipy — which have advanced fluthest toward the new

”5

THE MANAGERIAL REVOLUTION

economy, ‘‘ socialism ” or “ national socialism ” is the term
ordinarily used. The motivation for this terminology is not,
naturally, the wish for scientific clarity but just the opposite.
The word socialism ” is used for ideological purposes in order
to manipulate the favourable mass emotions attached to the
historic socialist ideal of a free, classless, and international
society and to hide the fact that the managerial economy is in
actuality the basis for a new kind of exploiting, class society.
If the new rulers continue their present verbal usage, a book
like this one is not going to change the linguistic outcome.
For scientific purposes, however, the necessity remains to
distinguish clearly the new economy (whatever it may be
called) from the projected economy which was part of the
traditional socialist ideal.

There is not a trace of a magic in the structure of state
ownership which could in some mysterious and necessary way
eliminate class rule and domination. On the contrary (and
this is not a question of speculation but already shown by
historical experience), an economy of state ownership can
(though it need not) provide the basis for domination and
exploitation by a ruling class of an extremity and absoluteness
never before known. Those who control the state, those
whose interests are primarily served by the state, are the ruling
class under the structure of state-owned economy. Through
the state, they will control access to the instruments of produc-
tion. Through the state, they will control the distribution of
the products of those instruments so that they themselves
receive the privileged share.

This ruling class, as what has happened in the past few
decades already makes clear, will be, or at any rate its decisive
section will be, those whom I have called the managers.

The managerial economy will be, thus, an exploiting economy.
Here we must stop for a moment on the word “ exploit.”
This word is often used in a moral or psychological rather
than a mere neutral historical and economic sense. For
example, a “ bad ” employer who pays his workers sweat-
shop wages is said to exploit ” his workers, whereas a good ”
employer who pays union wages doe^ not. As the word is

1x6

ECONOMY OF MANAGERIAL SOCIETY

used in this book, there is no moral or psychological reference
of any kind. By an “ exploiting ” economy is meant simply
an economy wherein one group receives a relatively larger
share of the products of the economy than another. By
“ exploitation ” is meant the processes, whatever they may
be, whereby such an unequal distribution comes about, inde-
pendently of any moral judgment or of the psychological
motives of the individuals concerned. According to this
definition, all class economies are exploiting : feudal and
capitalist economies are exploiting ; and the managerial
economy will be exploiting.

The specific process whereby exploitation takes place will
not, of course, be the same as in capitalist (or feudal) society.
No individual will be able to make money (profits) by using
money as private capital in economic enterprise. “ Capital,”
so far as it would be proper to use the term, will be supplied
entirely, or almost entirely, through the state. Control over
the instruments of production will be exercised by the managers
through their de facto control of the state institutions — through
the managers themselves occupying the key directing positions
in the “ unlimited ” state which, in managerial society, will
be a fused political-economic apparatus. Their preferential
treatment in distribution will be allotted to them in terms
of status in the political-economic structure, not in terms of
the capitalist type of property rights (any more than of the
feudal type). The experiences of Russia and Germany already
show that this preferential treatment in distribution need not
take an exclusively monetary form : the nominal monetary
income of managers may be low, with privilege in the form
of cars, houses, food and clothing, luxuries, and so on, being
granted direct for ” services to the sta!te.” It is the fact of
preferential distribution that counts, not the form it takes
or the means by which it is carried out.

In capitalist economy, preferential income distribution to
the capitalists takes place through the fact that the owners
of the iiutrumcnts of production retain the ownership rights
in the products of those instruments. Since these products
can be sold on the market at a price higher than the cost of

II7

THE MANAGERIAL REVOLUTION

the labour that goes into making them, there is a surplus,
and a large surplus, for distribution on the basis of claims
other than those for wage-payments. According to capitalist
practice, charges against this surplus are made in a great
variety of forms, which obscure what is actually happening.
Among these, however, such charges as interest, rent, dividends,
bonuses, and high executive salaries assure the diversion to
the capitalists of their preferential share in the national
income.

Under a completely state-owned economy, preferential dis-
tribution could not take place in the same manner as under
capitalism. But there would be no difficulty in working out
new methods of exploitation. Freda Utley, in her remarkable
book on Russia, The Dream We Lost, has shown some of the
devices which are at present used in that nation. One is, in
effect, a gigantic food tax. The state buys from the peasants,
at fixed prices, the food which is to be processed and sold to
the rest of the population (in some cases, in processed form
back to the peasants themselves). The state then, as the sole
important distributor, sells the food to consumers, ailso at
fixed prices. The spread between the prices can be as large
as the traffic will bear. The second major device is made
possible by the state’s monopoly position in the production
of non-agricultural goods and services. These also can be
sold at fixed prices almost any percentage higher than the
costs of production.

Through the price spread in both instances, the state is left
with enormous funds at its disposal. Some of these must be
devoted to such always-necessary social charges as deprecia-
tion, plant expansion, accepted social services, and so on.
But the remainder can be so adjusted as to increase, relatively,
the income of those who are actually controlling the state,
the new ruling class. This is just what is done in Russia,
and these two devices of exploitation are so simple and so
easy, comparatively speaking, to control and manipulate that
we may expect them to be very generally utilized in managerial
economy. \ However, other equally effective devices can
certainly be worked out. In fact, as the example of Germany

ii8

ECONOMY OF MANAGERIAL SOCIETY

(and of the New Deal, for that matter) is proving, more
orthodox taxation methods arc capable of very flexible use
in redirecting income toward new channels, in violation of
capitalist “ laws ” of profits and wages, even while capitalist
relations remain nominally intact.

The system of managerial economy might be called a type
of “ corporate exploitation ” as opposed to the “ private
exploitation ” of capitalism. It is by virtue of its functional
status that the managing group exploits the rest of society.
There are, as I have mentioned, partial analogies in other
cultures, for example certain cultures where a priest-group
has been the ruling class. In some of these cultures it was
the corporate body of priests, acting as a group, which held
social dominion ; rights of rule were not recognized as attach-
ing to the individual as such. (To a certain extent, the
analogy would even hold for the medieval Church.) Quali-
fications for membership in the ruling priest-group were of
diverse kinds : sometimes blood relationship, but often abilities
of various sorts such as supposed supernatural abilities as
marked by visions, trances, or other abnormalities. Naturally,
the existing priest-group was able to control to a considerable
extent the personnel of its recruited membership since the
priest-group had the reins of wealth, power, and education in
its hands.

There is a more limited analogy to be found in the Catholic
Church’s College of Cardinals, even to-day. The cardinals,
by virtue of their status in the Church hierarchy, have, as a
corporate group, the right to elect a new pope, in whose
office is vested sovereignty over the Church as a whole. They
do not possess this right, however, as individuals nor when
acting as individuals ; the right appertains to the corporate
body, not to the separate individuals who make up this body.
Within limits, the cardinals, with the help of their right and
the powers which, as consequences, flow from it, can control
the personnel of new members of the corporate body which
they make up ; and thus there can be, and is, a considerable
human continuity in the make-up of the college.

Similarly, the managers will exploit the rmt of mciety as a

119

THE MANAGERIAL REVOLUTION

corporate body, their rights belonging to them not as indi-
viduals, but through the position of actual directing responsi-
bility which they occupy. They, too, through the possession
of privilege, power, and command of educational facilities,
will be able to control, within limits, the personnel of the
managerial recruits ; and the ruling class of managers will
thus achieve a certain continuity from generation to generation.

*****>•>

An economic structure based upon state ownership of the
major instruments of production provides the framework for
the social domination of the managers. It must also be
noticed that this apparently is the only economic structure
through which the social domination of the managers can be
consolidated. Within capitalist society the power of the
managers is, as we have seen, extended, both in private enter-
prise and through the growth of governmental enterprise.
But this power is interfered with, limited by the capitalists
and by capitalist economic relations. The manager is never
secure. He can always be fired by someone or some group
of persons possessing capitalist ownership rights. His plans
for production must bow to ihe needs of a capitalist-profit-
dominated market ; he is prevented from organizing the
technical co-ordination of different branches of industry in
an efficient way. Moreover, he finds the chief rewards going,
not to himself and his fellow managers, but to the owners.
We have seen that the managers cannot solve their problems
by becoming themselves capitalists. Nor docs any other type
of private property right seem to offer solution. Certainly
the resumption of feudal forms, which could be adjusted only
to a predominantly agricultural economy, is impossible for
modem economy ; and chattel slavery would be no less
impossible. Fusion of the economy with the state, expansion
of the state functions to comprise also control of the economy,
offers, whether or not the managers individually recognize
it, the only available means, on the one hand for making
the economic stmeture workable agmn after its capitalist

180

ECONOMY OF MANAGERIAL SOCIETY

breakdown, on the other for putting the managers in the
position of ruling class.

There are many millions of persons and many groups in
the world to-day who consciously advocate state ownership
of the instruments of production. They do so out of a variety
of motives : some because they think it will bring a classless
society and freedom, others because they think it will make
possible universal material well-being, others from even more
abstractly moral reasons. The attitude and actions of these
persons and groups are one of the important social forces
tending to bring about state ownership. Nevertheless, the
result of state ownership does not depend upon the motives
from which these persons advocate it. Under the given
historical circumstances, the result will be not classlessness
and freedom, not even universal material well-being, but a
new form of exploiting, class society — managerial society.

On the other hand, many, perhaps most, of the present
managers do not consciously want or favour state ownership.
Nevertheless, the managers — if not the individuals who are
to-day managers, then those who will be to-morrow — will
primarily benefit from it. We have here an irony that is
often repeated in history.

In the sixteenth century many persons consciously wanted
to get rid of the feudal lords and feudal exactions, to build
strong national states, and so on. They wanted these things
from diverse motives : a love of freedom, a wish for more
material comforts, often from religious motives — a hatred and
rejection of the Catholic Church. On the other h^nd, many
of the capitalists of the time did not want these things. Their
highest ambition was often to become feudal lords. They
often were afraid that strong national states would interfere
too much with the independent cities where their economic
base had previously been. The majority of the great sixteenth-
century financiers and merchants of south Germany were
good Catholics, and supported the Catholic emperor and
thus, indirectly, Rome in the religious wars. Nevertheless,
the results, when won, in spite of motives, benefited primarily
the capitalists who had taken part in the struggles, then other

121

THE MANAGERIAL REVOLUTION

capitalists. Just so do the results of doing away with the
capitalists, of establishing state ownership of the instruments
of production, from whatever motives the aims are pursued,
act to the primary benefit of the managers and toward the
consolidation of a social structure in which the managers
will be the ruling class.

Many persons want state ownership and control, but the
tendency toward state ownership and control is not by any
means dependent exclusively on the fact that many people
want it and deliberately work toward it. There are persons
who want to revive feudalism, who would like socialism, no
doubt even those who wish for chattel slavery ; but actual
conditions prevent their wants from having any chance of
being realized. The circumstances, problems, and difficulties
of the present, however, all combine to furnish soil on which
state ownership and control grow rapidly. Private enterprise
proves unable to keep the productive process going ; the
state therefore steps in. Modem total war demands the
co-ordination of the economy ; this can be done only through
state control. Private investment dries up ; state investment
takes its place. Private enterprise fails to take care of the
unemployed ; the state gives them jobs. Foreign trade
cannot be conducted successfully and prohtably on a capitalist
basis ; the state establishes export and import controls and
monopolies. Private enterprise can no longer handle the
great projects (roads, dams, steamship lines, electrical plants,
shipbuilding . . .) required to keep contemporary society
going ; the state intervenes. There is nothing arbitrary about
the extension of the state into the economy. It is not the
result of a plot or a conspiracy. It seems to offer the only
way of meeting the problems which actually arise ; and
consequently, however many may reject and oppose it, there
are always seme, and enough, ready to put it into practice.

Thpugh a detailed sketch of the managerial economy is
impossible to give in advance, some (ff its features and some
of its possibilities are already clear. We have seen that its
structure is based upon the state ownership and contred of
the nuyor instruments of production, with the state in tmm

tsta

ECONOMY OF MANAGERIAL SOCIETY

controlled by, and acting in the primary interests of, the
managers. This in turn means the disappearance of capitalist
private property rights vested in individuals.

From this structure it follows that it is no longer necessary
for each branch of industry, or for industry as a whole, to
operate as a profit in the capitalist sense. This will no doubt
seem surprising or ‘‘ contradictory ’’ to those whose thinking
on economic questions is determined exclusively by capitalist
ideas. However, it is obvious enough when we reflect a little
or consider the recent history of Russia and Germany. There
is nothing in the nature of factories, mines, railroads, airplanes,
radio transmitters that compels their operation to be dependent
upon monetary profit. This dependence results merely from
the specific economic relations of private enterprise, of
capitalism. When these relations are gone, the need for profit
is gone also. With the help of centralized state direction,
managed currency, state foreign-trade monopoly, compulsory
labour, and prices and wages controlled independently of any
free market competition, branches of the economy or the
whole economy can be directed toward aims other than profit.
The managerial economy is no longer “ the profit system.”

In managerial economy, the role of money will be con-
siderably restricted as compared with its all-pervasive influence
in capitalist economy. In the first place, money will no
longer function as individual capital, which is its distinctive
and decisive use in capitalist economy. But even in exchange
transactions the use of money, as we have known it, will be
limited. How far these limitations will go in the future we
cannot say in advance ; but we already are acquainted with
some of them.

Russia and Germany have shown how successfully foreign
trade can be handled by a new type of barter ” method.
It is argued by many economists that this barter method is
clumsier and less efficient than the traditional capitalist
methods which are dominated by the monetary aspect of the
exchange, relatively firec trading in currencies, and the help
of gold to i&ettle balances. This argument, however, holds
only from a capitalist point of view : the barter method is

123

I

THE MANAGERIAL REVOLUTION

“ clumsier,” less workable, only if we are thinking in terms
of capitalist economic relations. Actuailly, these same econo—
mists refute themselves, for they go on to show, correctly, that
the controlled barter method can be competed with only by
adopting the same method. If it were in reality an inferior
method, it would not raise the slightest competitive problem.
The United States, for example, would be only too delighted
that other nations made use of it, because its inferiority would
guarantee that the United States, sticking to the old ways,
would without trouble win out internationally. As everyone
knows, just the opposite is the case.

Even in interior exchange transactions, the importance of
money will decline. Where goods and services are supplied
by the state without the consumer’s paying directly in money
for each unit of them, money is necessarily functioning more
modestly than where it appears directly in each transaction.
Many of such goods and services have been present for some
while : roads, bridges, public sanitation services, parks,
scientific aids, water, and others. Russia and Germany show
(what could be predicted in any case) that the field of these
public services is to be vastly enlarged under managerial
economy. An increasing number of consumer goods and of
services will be supplied without the direct intervention of
money payments ; that is, an increasing percentage of real
income will not take monetary form. Theoretically, there
would seem to be no limit in this replacement of money. In
practice, however, the convenience of money, and especially
its convenience in maintaining differentials in income, seem to
guarantee its survival. However (as, again, experience already
shows), money will become increasingly and perhaps altogether
divorced firom any metallic base. The Fort Knox gold pile
may well be turned into a monument for posterity, like the
Egyptian pyramids.

These developments in connection with money mean, fium
another point of view, that in managerial economy goods and
services do not to such an extent or as fully as in the capitalist
market fimedon as commodities. Barter exchange, the allot*
ment of goods and services without monetary intervention*

124

ECONOMY OF MANAGERIAL SOCIETY

both mean that the objects concerned are not treated simply
as commodities — that is, as abstracted embodiments of so
many units of exchange value — but as specific, qualitative
entities fitted to serve certain needs and not others, inde-
pendent, or partly independent, of exchange value.

Just as the bourgeoisie (capitalists) will be eliminated in the
managerial economy, ^o will the position of “ free workers ”
(proletarians), as known under capitalism, be greatly altered.
The “ fireedom ” of proletarians under capitalism is, of course,
a curious kind of freedom. It means, in the first place,
freedom from ownership rights in the instruments of pro-
duction. There will be no change in this freedom : effective
control of the instruments of production will be held not by
workers but by the managers through their state. But pro-
letarian freedom under capitalism also means, to a limited
extent, freedom for the workers to sell their labour or not to
sell it (though the alternative if not selling it, being sia’vation,
is not too realistic), to sell it to one competing employer as
against others, and to ba>-gain over its price. These latter
possibilities will not exist in anything like the same form
under managerial economy. There being only one major
employer (the state), there will be no bargaining among
competing employers ; and the assignment and transfer of
jobs, as well as the fixing of rates of pay, will, not be left to
the accidents of market bargaining.

There seems no reason to believe that managerial economy
will be subject to the capitalist type of economic crisis, since
the factors involved in this type of crisis, which are all related
to the profit requirement of capitalist economy, will be done
away with. However, it is most probable that managerial
economy will have its own form of crisis. Managerial crises
will, it would seem, be technical and political in character :
they will result from breakdowns in bureaucratized adminis-
tration when faced with, say, the complicated problems of
sudden shifts to war or peace or abrupt technological chMiges ;
or from mass movements of dissatis^tion and revolt which,
with the state and economy fused, would be automatically at
onoB political and economic in cbrnracter and effect.

125

THE MANAGERIAL REVOLUTION

In managerial economy, the regulation of production will
not be left to the ‘‘ automatic ” functioning of the market,
but will be carried out deliberately and consciously by groups
of men, by the appropriate institutions of the unlimited
managerial state. As we saw, the necessarily decentralized
economy of private enterprise makes impossible such deliberate
regulation of production as a whole. Under the centralized
economic structure of managerial society, regulation (planning)
is a matter of course.

If we compare these features of managerial economy with
our review, in Chapter II, of the chief features of capitalist
economy, we see at once that all of the leading characteristics
of capitalist economy are either not present at all or present
only in a drastically modified form in managerial economy.
This fact reinforces the rejection of the term “ state capitalism.”

Managerial economy would not be going to replace capitalist
economy unless it could solve, at least in some measure, those
key difficulties (which we noticed in Chapter III) that are
faced by capitalism and make impossible the continuance of
capitalism. We know, without waiting for the future, that
manageri2Ll economy can do away with mass unemployment
or reduce it to a negligible minimum. This was done, by
managerial methods, in Russia and Germany at the same
time that England, France, and the United States proved
incapable of doing it by capitalist methods. The question
here is not whether we approve ” of the way in which mass
unemployment was or will be got rid of. We may think that
xmemployment is preferable to, for example, conscript labour
battalions. Nevertheless, mass unemployment is the most
intolerable of all the difficulties that any economy can face,
sufficient, by itself, to guarantee the collapse of an economic
system ; and we are concerned with the fact, already suffi-
ciently proved, that managerial methods and managerial
economic relations can get rid of unemployment, whc?:eas
capitalist methods no longer can do so. The truth is that
Russia, Germany, and Italy are not alone in having used the
non-capitalist, managerial methods in handling unemploy-
ment. The COG in this country is cut from the same pattern*

126

ECONOMY OF MANAGERIAL SOCIETY

Relief work in general is a half-hearted variant. If the United
States had not resorted to such means, mass unemployment
in this country would have been immeasurably worse and
would already have sent the economic structure toppling.

Under managerial economy, the long-term production
curve can again resume its advance after the decline under
dying capitalism. Indeed, during the past decade, if we
except small nations subject to special influences and without
world economic significance, the degree to which nations
have been able to build up a general production advance
is closely correlated with the degree to which they have been
transformed along managerial lines : Russia and Germany
head the list of the great nations ; the United States and
France end it. Here, again, we are not concerned with
what goods are produced, but with the volume of production
relative to population and potential capacity. We may think
that some of the goods produced (bombers and tanks, for
instance) are not worth producing, are positively evil ; we
may think it is not progress ’’ to be able to produce more of
them ; but, nonetheless, the ability of one system of economy
to produce relatively more goods than another system is a
decisive indication of their relative survival value. Nor
should we be so naive as to imagine that the structural and
institutional relations which permit the production of a
greater volume of armaments do not also permit the produc-
tion of a greater volume of other types of goods. If it were
really true, as so many say, that the Nazi economy were
solely an “ armament economy,’’ no one in the United States
would be so worried, as all serious economists are worried,
about Nazi economic competition after the war.

Similarly, managerial economy is in a better position than
capitalist economy to make use of new inventions and tech-
nological devices. It is not restricted by the same profit
requirements that often mean a disruption of the capitalist
market through a too-sudden introduction of new inventions*
This was not the least of the reasons why Nazi Germany
was able to overcome, in part through the help of newly
invented ersatz products, its seemingly hopeless inferiority in

127

THE MANAGERIAL REVOLUTION

resources to France and England and why Germany at first
developed more and better fighting machines.

Capitalist economy, we saw, is no longer able to use, for
productive purposes in private enterprise, its own available
capital funds. These idle funds will be no problem for
managerial economy. The managerial state will either con-
fiscate them, at once or gradually, or it will, for an interim
period, compel their use on its own terms and for its own
purposes.

Managerial economy will be able to exploit and develop
backward peoples and areas in a way that, as we found, is
no longer possible for capitalist economy. Capitalism, though
it needs to exploit these peoples for its own preservation, is
at the same time no longer able to do so profitably. Mana-
gerial methods, both economic and political, free from
capitalist profit requirements, reopen Asia and Africa and
Latin America to a new exploiting era.

Finally, as I have already mentioned, managerial economy,
by virtue of centralized control of the economy as a whole,
is able to plan for, and with, the economy as a whole, in a way
that is not possible for capitalist economy, with its system of
devisive and un-co-ordinated control. There comes into being
a “ five year ’’ or two year ’’ or ‘‘ four year or “ ten
year planning commission for the economy as a whole.
Just as the very concept of such planning commissions is
diametrically opposed to the individualistic ideologies of
capitalism, so is the fact of their existence impossible for
capitalism in any but a purely nominal sense.

« ♦ m « «

These last pages might seem to suggest that the managerial
economy Is about to usher in an age of plenty, sweetness,
and light such that no man in his senses could do anything
but welcome with rapUire the f^rospcct of the future. With
‘‘ all problems solved,” milk and honey are apparently just
around the comer. It is necessary to paint into this picture

128

XCONOMY OF MANAGERIAL SOCIETY

— ^which is, besides, only an economic picture so far — a few
of the shadows.

I am not dealing in this book, let me repeat, with questions
of “ good ” or “ bad,” of what “ ought to be ” or what we
“ ought to do.” I am trying to present a theory, a hypothesis,
which seems to me more probable than any other on the
evidence available, about what is going on in society and
where it is leading. I have no intention whatever of judging,
in this book, whether what is indicated by this theory is
“ good ” or ” bad ” ; whether the transition from capitalism
to managerial society constitutes “ progress ” or not, whatever
“ progress ” may mean.

Moreover, even the apparently more modest question of
whether managerial society will be “ more beneficial to
men ” than capitalist society is in reality incapable of being
answered. More beneficial in terms of what, to what men ?
When capitalism is finished, each man and each group of
men necessarily loses both the distinctive goods and the
distinctive evils that capitalism brought. A different organi-
zation of society will bring its own distinctive goods and its
evils ; it is not easy to know what evaluations men will make
of what they have gained and lost.

It does seem possible to make two points : Managerial
society will bring no benefits to the capitalists as a class,
unless extinction is a blessing, since there will be no capitalist
class in managerial society. And, second, there is good reason
to believe that under managerial economy there will be a
greater total output of material goods in relation to the total
population than under capitalism, including such goods as
supply the needs of warmA, food, shelter, and so on. This
would seem to indicate that the masses on the average (not
necessarily any particular section of the masses, and the
result is not guaranteed) would have a somewhat higher
material standard of living. Whether this would be con-
sidered compensation for other facets of managerial society
is, of course, a quite different question.

That managerial society will, as I have stated, be able to
solve certain of the major difficulties now faced by capitalism

lag

THE MANAGERIAL REVOLUTION

and incapable of solution under capitalism, seems to me
highly probable. This does not, however, mean that mana-
gerial society will not have its own difficulties, including
economic difficulties, and perhaps they will be judged more
poignant than those of capitalism.

I have already suggested that, though managerial economy
will not be subject to the capitalist form of periodic crisis, it
will have its own kind of crises. These may well be very
devastating in their total social effects.

Another group of the problems of the future emerges from
the following consideration : Under managerial economy it
will be possible to plan, to a considerable extent, the general
process of production. This will be possible because control
of the economic process will be centralized ; there will be
the institutional mechanisms for translating deliberate plan-
ning into action. Neither the centralization nor the mechan-
isms exist tmder capitalism, and deliberate planning is therefore
not possible, or possible only to a minor and partial degree.

But, contrary to a rather widespread popular miscon-
ception, there is no necessary social virtue in “ planning.”
Before the meaning of a “ plan ” is understood, we must
know what the plan is for, what ends it is to serve ; there
is no such thing as a “ plan ” in and by itself. Just as many
new inventions can be used equally well to kill men or to
grow better food, so may there be plans for freeing humanity
or for enslaving it further.

A plan does not, of course, have to have one single and
narrow aim. It may be directed simultaneously toward
several aims, though it is quite possible that in such cases
the different aims may interfere with each other. Unfor-
tunately, we already know what two of the aims of mana-
gerial planning arc : the more effective prosecution of war,
and the support of the power and privilege of a new ruling
class. There is no doubt that the ability to plan, which
follows from the managerial structure, makes it easier to
'realize these aims, as well as other aims that may also be
present. Theoretically, it is true, these aims might include
greater happiness, security, and culture for mankind at large.

ISO

ECONOMY OF MANAGERIAL SOCIETY

Even within the managerial planning, there will be plenty
of confusion. The rulers of managerial society do not really
proceed scientifically any more than has any other ruling
group. Their social aspirations are hidden by ideologies,
not clarified by a genuine social science. The ideologies
mask what is happening, not only from men generally, but
from the rulers themselves. When a process is not subjected
to scientific control, there is no systematic means for the
elimination of errors, no rational device for the resolution
of conflicts : errors may accumulate into disasters ; conflicts
tend toward catastrophe.

No matter how scientific the administration of managerial
society were made, difficulties would still remain. Managerial
society is a class society, a society in which there are the
powerful and the weak, the privileged and the oppressed,
the rulers and the ruled. If we base ourselves upon what we
know from the past and not on dreams of other worlds, there
is no reason to think that the law which decrees that all
social groups of any size try to increase their relative power
and privilege will be suspended in managerial society. Even
if the attempt is in fact hopeless, it will still be made, directly
or indirectly, openly or covertly. Put in the crudest way,
there will continue to be, as there has always been in human
history, fighting over the spoils. The fight may translate,
and thereby partly hide, itself into political and juridical,
as well as physical, forms that we do not as yet suspect, but
it will go on. And this is sufficient reason, if there were no
others, why we should have as little faith in the promises
of the ideologies of the managers — fascist or Leninist or
Stalinist or New Dealer or technocratic — as we ought to
have learned to have in those of the capitalists, when they
tell us that following their pipe will guarantee a world of
plenty and peace and freedom. The world of to-morrow
will be very different from yesterday’s ; but if we choose to
accept it — and most will accept it, whether or not they choose
— there will be some satisfaction in doing so in terms of
realities, not illusions.

^ 3 *

X

THE MANAGERS SHIFT
THE LOCUS OF SOVEREIGNTY

-A.NY ORGANIZED SOCIETY PATTERNS ITS LIFE ACCORDING TO
certain rules — customs, laws, decrees. These rules may not
be written down, may not be explicitly formulated even in
verbal terms, but they must exist or there would be no sense
in calling the society organized. The origin of many of the
rules, at any given moment, is lost in a remote past ; but
there must be within the society some mechanism for en-
forcing those taken over from the past, and, since the rules
are always changing and being added to or dropped, for
stating and enforcing new or changed rules. A social group
which makes and enforces its own rules for itself, and does
not recognize rules made for it by an agency outside the
group, is called autonomous ’’ or ‘‘ sovereign ” — such as
the capitalist nations all claimed to be and the chief of them
in fact were.

The “ sovereignty ” of the group, by virtue of which rules
are made, cannot, however, simply float in the group air.
It must be localized^ concretized, in some human institution
which is accepted as the institution from which rules (in
complex society called laws come. In practice, this
institution never includes all the members of the group :
it might, for example, in a comparatively small and simple
society, include all persons above a certain age meeting in
“ council,** but it would exclude at least infants. In complex
and large societies, the institution is always relatively small,
sometimes a single person — a king, for instance, who publishes
laws as personal royal decrees.

In large societies the situation is more complicated than

13^

SHIFT LOCUS OF SOVEREIGNTY

might be suggested by the preceding paragraph. The par-
ticular institution (king or parliament or council of elders)
where sovereignty is localized does not, in a broader sense,

possess ’’ full sovereignty. Basic social power and privilege
are possessed by the ruling class ; the small institution is able
to act as sovereign — to promulgate laws and have them
enforced — not by virtue of the individual strength of its
individual members (or member) but because, on the whole,
it represents the interests of the ruling class and is, besides,
able to gain acceptance or, at least, sufferance from a suffi-
cient percentage of the population outside of the ruling class.
Nevertheless, the question of the localization of sovereignty
is by no means trivial in the history of societies. Some institu-
tion must be the public maker of the rules, the laws. Histories
can be, and have been, written which centre their attention
on just this problem of where sovereignty is to be localized,
and the many struggles which have as their political form
the disputed claims to sovereignty of different institutions.

History shows that there are many kinds of institution
which can serve the social purpose of the localization of
sovereignty. However, within any given type of society
there arc fairly strict limitations to the possible varieties.
One of the most obvious and important of these limitations
is technical : the sovereign body must be able to handle its
work, at least not too badly. It is a technical limitation which
excludes infants — ^infants do not know enough to be law-
makers, even poor law-makers — or which necessitates aban-
doning assemblies of all adults after a society gets beyond a
certain size : there would be no place where they all could
assemble, much less transact business if ^sembled. More-
over, a tribe that does nothing much else but hunt or fish
has got to have a sovereign body that can handle at least
those political problems that come up in connection with
hunting or fishing.

But there are different sorts of limitation as well. For
instance, the sovereign body must have a certain appropriate-
ness of form in terms of the patterns of social thought, the
icbolc^es. If it does not, it will be hard for it to get publicly

133

THE MANAGERIAL REVOLUTION

accepted as sovereign. Furthermore, a new type of society
will almost certainly have a different type of sovereign institu-
tion from that in which sovereignty was localized in the
preceding society. This follows because the old institution
becomes, over a long pei iod, hardened in the ways of the old
society, not sufficiently flexible to re-adapt itself to the new ;
and because mass hatred is directed against the old institution
as repiesentative of the old order. Though this is the case,
the institution where sovereignty is shifted will usually have
existed in the old society, though not as the sovereign institu-
tion. What will be new will be its possession of sovereignty,
not its existence. This tends to be the case because social
institutions in actuality change slowly, cannot be built up
artificially overnight ; and because the institution to which
sovereignty shifts really represents in the old society those
forces tending toward the new.

In an earlier chapter I have referred to the shift in the
localization of sovereignty that occurred in connection with
the transition from feudal to capitalist society. The result
of this shift was to localize sovereignty more and more fully
in ‘‘ parliaments ’’ (by whatever name they were, in different
nations, called). History is not as tidy as a geometrical
theorem ; there is not a perfect equation between the develop-
ment of capitalist society as a whole and the development
of the sovereignty of parliament ; but that there is a general
correspondence, that in capitalist society sovereignty is typically
localized in parliament,^ could hardly be denied.

There is, certainly, a historical and structural propriety in
this fact. Parliaments (the ‘‘ commons ” or third estate ’’
only is in question here) existed in the late Middle Ages.

^ In the United States, under the interpretation of the Constitution which
became accepted during the early years of the nineteenth century, sovereignty
has been, by and large, shared by Congress and the Supieme Court. Some
historians would, indeed, hold that the Supreme Court alone has been the
sovereign institution. This United States deviation from pure parlia-
mentarv sovereignty does not, however, aifect the main course of my analysis,
particularly since the aim of this analysis is to clarify the present shift of
sovereignty away from those institutions where it has been topically localized
in capitalist society to a type of institution which was, on any account, not
sovereign within capitalism.

134

SHIFl' LOCUS OF SOVEREIGNTY

They were simply the representative assemblies of the bur-
gesses (the early capitalists) of the towns. They were called
together, as infrequently as possible, by prince or king or
great feudal lord, primarily when the prince wanted to get
money from the burgesses, in return for which the burgesses
would demand certain rights. Through this bargaining, the
social power of the burgesses, and thus, on the political side,
the sovereignty of their representative institutions, the parlia-
ments, were built up. Historically there is no doubt about
the status of parliaments as the typical political institution
of the capitalists. In spite of changes and of the extension
of the vote to sections of the population other than the
capitalists, parliaments have retained the social marks of
their origin. Constitutions, written and unwritten, and above
all the control of basic power and privilege by the capitalists,
have kept parliaments securely within the framework of
capitalist society.

But in make-up and structure also, parliament has been a
most appropriate institution for the localization of sovereignty
under capitalism. Consider who are the members of parlia-
ments. From the beginning probably a majority of them
have been lawyers — that is, persons trained in the economic
and juridical relations of capitalist society. They have been
the kind of person you meet in businessmen’s clubs — not
clubs of the first rank, perhaps, but whose members are all
the sounder and surer capitalist loyalists for the very reason
of their second-rateness. In addition, there has been, especially
in earlier days, a minority of powerful and brilliant political
figures who identified the advance of their own political
careers with the fate of capitalist society.

These persons, the members of parliaments, met, discussed,
and concluded in circumstances very similar to those of many
gatherings of capitalists in the economic field. When we read
descriptions of the sixteenth-century meetings of parliaments,
we cannot help being struck with the resemblance between
them and the meetings of the bourses (exchanges) which
were then starting in Antwerp and Lyons. The resemblance
has continued. A law comes out of a parliament in a way

^35

THE MANAGERIAL REVOLUTION

not at all unlike that in which a price comes out of the bar-
gaining on an exchange or other market.

Moreover, these men who were the members of parliaments,
and the parliamentary methods of conduct, were fitted, well
enough, for doing the law- and policy-making business of the
“ limited ’’ capitalist state. This business, though often of
the highest importance, did not as a rule need advanced
technical, engineering or scientific training. Nor, except on
rare occasions, was there much loss from the fact that the
procedure was slow and cumbersome. In what the parlia-
ments had to do, time out for party disputes, faction wrangling,
speeches from dozens of persons, compromises and attempts
at compromise, could usually be afforded. The economic
process went on, in any case, at its own pace and under its
own direction, largely outside the parliamentary province.
States moved ponderously in their own element.

♦ ♦ ♦ ♦ ♦

It is no news to anyone to point out that during the genera-
tion since the first world war, sovereignty has been slipping
away from parliaments. No development of this period is
more obvious and indisputable ; yet, for some reason, it
has received far less attention than its unquestionably major
importance deserves. It is a T:n irkable comment on men’s
unwillingness to face the facts of th( ‘r own time that, though
in recent decades hundreds of bor\s and articles have been
written on the history of how parliaments won sovereignty,
there is scarcely a handful of serious studies of how, to-day,
parliaments are losing it, or of the implications of this loss.

In four of the major nations of the modern world (Germany,
Russia,, Italy, France) sovereignty has already altogether
departed from parliament ; in two (Japan and England)
parliament retains a small shred ; and even in the last refuge,
the United States, parliamentary (Congressional plus Supreme
Court) sovereignty is more than half way into its grave.

In Germany, Russia, Italy and France, it is true that a
parliament, in form, is retained as part of the state apparatus.
These parliaments occasionally meet and even pass a few

136

SHIFT LOCUS OF SOVEREIGNTY

motions — unanimously, of course. But, even juridically, not
to speak of de facto^ these parliaments are no longer regarded
as possessing the attribute of sovereignty. The rules (laws)
for the societies do not issue from them. Their meetings are
simply propaganda devices, like a parade or a radio and
press campaign. Often the parliaments meet only to hear
a speech or two : they provide a sounding board, in a ritual-
istic way symbolizing the nation. Sometimes they take a
vote ‘‘ approving ” or accepting ’’ the speech. But they
never initiate any measure ; their acceptance is always of
something already done by another agency. However, even
this nominal, ex post facto acceptance is rare. The parliaments
take no part of any kind in almost all the actions of the
regimes.

The example of Russia is particularly instructive, because
revolutionary Russia made an attempt to continue parlia-
mentary sovereignty : not a sovereignty localized in the Duma,
the parliament of the old regime, but in 4 he Congress of
Soviets, which was thought to be the fitting representative
of the new order. The Congress of Soviets, in 1917, was made
up of representatives of local soviets which, in turn, were
elected primarily by workers and peasants in the various
local districts. In the Congress of Soviets which met at the
beginning of November, 1917, the Bolshevik party had a
majority. This Congress then declared itself to be “ the
government ” : that is to say, it claimed sovereignty and
declared that sovereignty was no longer possessed by the
Kerensky government which was based upon the remnants
of the old Duma. The Soviet Congress then proceeded to
enact the chief initial measures of the new regime and to
elect an executive — the Council of Commissars.

It would seem, then, that sovereignty was still localized in
a parliament ; and, for a short time, this was more or less
the case. But this state of affairs did not last. Parliamentary
sovereignty proved inappropriate for a nation that rapidly
developed in the direction of managerial society. Within a few
years, well before the death of Lenin and the subsequent
exile of Trotsky, the Soviet Gongresl had lost, one by one,

137

THE MANAGERIAL REVOLUTION

all the attributes of sovereignty. Its nominal rehabilitation
in the “ Stalinist ’’ Constitution of 1937 changed nothing and
left the Soviet Congress the mere minor propaganda
instrument which it continues to be.

The development was indicated at least as early as the
so-called “ Kronstadt ” revolt, which took place in 1921.
The opposition platform of the sailors and populace of the
Kronstadt area had as its key plank, new elections to the
soviets.” This demand was in reality an effort to return
sovereignty to the soviets and the Soviet Congress and an
implicit recognition that these institutions no longer possessed
sovereignty. The demand was rejected by the true sovereign
institutions of the soviet state, and the dissidents answered
by armed suppression. I am not here raising any question
about who was “justified ” in this famous dispute — a problem
which has been so hotly and so often debated. I mention
the incident to bring out only the point that it revealed the
loss of sovereignty by the Soviet Congress, that is, the
parliament.

In this shift of sovereignty away from parliament in Russia,
which seems to have taken place without any very clear inten-
tions on anyone’s part, several important factors were involved.
Experience shows that localization of sovereignty in parlia-
ment presupposes the existence of more than one legal
political grouping (political party or some organized group
comparable to a party). When there is more than one
party, even if one of the parties is an overwhelming majority,
parliament has always at least a minimum real function,
since it provides a forum where the majority defends ^its policy
against minority criticism. But where there is only one party,
there is really nothing much left for parliament to do, and
its political significance cannot be more than propagandistic.
The politically significant body will be the controlling
institution of the one political party, whatever that institution
may be. The decisions of the party institution, when the
one party monopolizes political life, complete the political
job. The parliament can only reflect these decisions to
whatever extent is thought propagandistically expedient.

138

SHIFT LOCUS OF SOVEREIGNTY

Even in this minor work, the parliament’s sphere will dry
up, since there is no use in merely having parliament duplicate
tasks that are actually done elsewhere. From one point of
view, and for certain types of activity, sovereignty shifts into
the hands of the key party institutions.

But this is not the whole story. We are not asking here
who or what in some ultimate sense “ runs things ” in a
society (as a matter of fact, as we have seen, in the more
general sense things are run by and for the ruling class).
Often in a society where sovereignty is localized in a parlia-
ment, the decisions later adopted by parliament are actually
made by some institution of a firm majority party. Never-
theless, the phenomenon which I have called the “ localiza-
tion of sovereignty ” is understood within a society, even if
not by that name. Whoever may run things ultimately, some
given institution or group of institutions is commonly recog-
nized and accepted as the public lawmaker, the proclaimer
of the rules for society. A political party or parties must
work through this institution or group of institutions, at the
least. In capitalist society the typical institution of this sort
is the parliament. We are asking what institution or group
of institutions replaces parliament in this matter of the
localization of sovereignty. We are not concerned here with
where real ” power may be. History has shown the enormous
symptomatic importance of shifts in the localization of
sovereignty, and that is all that is necessary for our present
purposes.

In the case of Russia, as of Germany and Italy, the rules,
regulations, laws, decrees, have more and more issued from
an interconnected group of administrative boards, com-
missions, bureaus — or whatever other name may be used for
comparable agencies. Sovereignty becomes, de facto and then
de jure also, localized in these boards and bureaus. They
become the publicly recognized and accepted lawmaking
bodies of the new society. When you want to know what the
law is, you look up the records not of parliament but of a
Four Year Plan Commission or Commissariat of Heavy
Industry or Bureau for the Colonies. . . . Similarly, the place

&

139

THE MANAGERIAL REVOLUTION

of “ committees of parliament ” is filled by subcommissariats
and subsidiary bureaus. Sovereignty has shifted from
parliament to the administrative bureaus.

There are many who think that this development is the
special result of the activities of communist and fascist
politicians who by means of “ subversive ” activities have
overthrown the old parliamentary order. As soon as we
turn our eyes back to the United States we should begin to
realize the incompleteness of such a view. Exactly the same
process has been going on in the United States as everywhere
else, though it is to-day at a different stage from that reached
in Russia or Germany. This fact is enough to show that the
process has deeper historical roots than the deliberate schemes
of revolutionaries.

In the United States, sovereignty may still be chiefly located
in Congress (together with the Supreme Court), it may still
be the principal “ lawmaking ” body ; but no one with
eyes open during the past generation and especially the past
decade will believe that its claims are to-day undisputed.
“ Laws ” to-day in the United States, in fact most laws, are
not being made any longer by Congress, but by the NLRB,
SEC, ICC, AAA, TVA, FTC, FCC, the Office of Production
Management (what a revealing title !), and the other leading
“ executive agencies.” How well lawyers know this to be
the case ! To keep up with contemporary law, it is the rulings
and records of diese agencies that they have chiefly to study.
How plainly it is reflected in the enormous growth of the
“ executive branch ” of the government — which is no longer
simply executive but legislative and judicial as well — in
comparison with that of the other two branches. Indeed,
most of the important laws passed by Congress in recent years
hRve been laws to give up some more of its sovereign powers
to one or another agency largely outside of its control.

The process is, naturally, not yet completed in the United
States. Congress is not yet the same as Hitler’s Reichstag
or Stalin’s Soviet Congress. But it has gone much further
than Congress itself would be willing to realize. Congress
still occasionally ** revolts,” still now and then disdplines ”

140

SHIFT LOCUS OF SOVEREIGNTY

an administrative agency or even abolishes it ; but these acts
are like the petty tyrannies of an already close-to-powcrless
old man. Very little control over the state is actually, to-day,
possessed by Congress. The last year has shown that even
the question of making war, most crucial of all the attributes
of sovereignty, is, in spite of the Constitution, in reality
beyond the power of Congress. Wars, also, are no longer
conducted according to the parliamentary code.

In the new form of society, sovereignty is localized in
administrative bureaus. They proclaim the rules, make the
laws, issue the decrees. The shift from parliament to the
bureaus occurs on a world scale. Viewed on a world scale,
the batde is already over. The localization of sovereignty
in parliament is ended save for a lingering remnant in
England (where it may not last the next few months), in
the United States, and certain of the lesser nations.

There is no mystery in this shift. It can be correlated
easily enough with the change in the character of the state’s
activities. Parliament was the sovereign body of the limited
state of capitalism. The bureaus are the sovereign bodies of
the unlimited state of managerial society. A state which is
building roads and steel mills and houses and electric plants
and shipyards, which is the biggest of all bankers and
farmers and movie producers, which in the end is the corporate
manager of all the major instruments of economic production,
can hardly be run like the state which collected a few taxes,
handled a leisurely diplomacy, and prosecuted offenders
against the law. Nor can the same kind of men run it. The
new agencies and new kinds of agency are formed to handle
the hew activities and extensions of activity. As these activities
overbalance the old, sovereignty swings, also, over to the new
activities and extensions of activity. As these activities over-
balance the old, sovereignty swings, also, over to the new
agencies. If a state is running steel plants, this is a more
influential activity than punishing murderers ; and the
institution directing the steel plants has more social weight
than that which makes laws about murderers.

In theory, even lender these circumstances, the locus of

141

THE MANAGERIAL REVOLUTION

sovereignty might remain in parliament. Parliament might
continue to exercise representative sovereignty rights with
respect to the great issues of general policy, providing a basic
guide for all the agencies and bureaus. But this, which
might well prove awkward in any case, is ruled out in practice
for other reasons.

The shift in the locus of sovereignty is only a symbol of the
shift in basic social relations, the shift from the rule of the
capitalists to the rule of the managers. As has happened in
the other comparable historical transitions, managerial society
does away with the representative political institution of the
old society, not merely because a new type of institution is
technically better for the new society, but precisely because
the old institution represents the old society ; it becomes
despised and hated, and the resentment of the masses is
turned against it (look at France in the early summer of 1904) ;
psychologically, ideologically, it is not suited for the new
rule.

Equally important, the administrative bureaus have the
same kind of general appropriateness for localizing managerial
rule as the parliaments had for localizing capitalist rule. For
that is the real significance of the shift in sovereignty toward
the bureaus : it is simply one of the phases, in the field of
political structure, of the transition from capitalist to
managerial society.

The old-time parliamentarians do not do well in the
bureaus. One or two of them may be present, as figureheads,
for decorative purposes. But the actual directing and
administrative work of the bureaus is carried on by new
men, a new type of men. It is, specifically, the managerial
type, the type we noticed also when considering the structural
developments in ‘‘ private enterprise.’’ The active heads of
the bureaus are the managers-in-government, the same, or
nearly the same, in training, functions, skills, habits of thought
as the managers-in-industry. Indeed, there is less and less
distinction between the two : in Russia, managers-in-industry
and managers-in-government are one and the same, since
there is no (important) industry apart from government. In

142

SHIFT LOCUS OF SOVEREIGNTY

all countries, as government expands, it incorporates the tasks
and fields which were before left to private industry.

Moreover, even before the state has swallowed all of the
economy, the way in which the new administrative agencies
conduct their affairs is, by the nature of the case, close to
the way in which the managers act elsewhere — certainly far
closer than a parliament’s way, which is at an opposite
extreme from the managers’ habits. In structure, mode of
functioning and personnel, the administrative agency, board,
or commission appears as the typical institution for the
localization of sovereignty in managerial society, as parliament
did in capitalist society.

It is clearly to the advantage of the managers that the
localization of sovereignty should be shifted to the adminis-
trative bureaus. These institutions are of a sort with which
the managers can most easily collaborate ; in fact, these
bureaus have, in their leading staffs, got to be peopled primarily
by managers — it is a managerial function that the bureaus
are performing. Thus the social rule of the managers as a
class can be best assured when sovereignty is recognized as
pertaining, de facto and to a considerable extent de jure as well,
to the bureaus. The social position of the managers is
buttressed in the bureaus both against the claims of the
capitalists and also against the pressure of the masses, neither
of which groups can function effectively through the bureaus.

Here, as before in the case of government ownership, the
practical attitude of the capitalists is most revealing. Just
as, in their overwhelming majority, the capitalists oppose
every extension of government ownership, so do they oppose
the setting up of new bureaus, boards, and commissions or
the extension of the powers of those already set up. They
inspire a constant stream of propaganda against them,
including a continual effort to belittle their accomplishments
and to picture them as ridden with graft, red tape, and
inefficiency compared with private business ” — which, when
*it is true (as it usually is not), is most often so because the
bureau work has been interfered with by private capitalists.
Following the customary pattern, when the agencies arc

H3

THE MANAGERIAL REVOLUTION

nonetheless set up and functioning, the private capitalists
then try to keep control of their activities in order to benefit
primarily themselves. So long as the transition is in its early
stages, so long as the dorhinant sectors of the economy still
are those of private enterprise, this can be done. But when
the balance swings, when the greater amount of economic
life is subject to the bureaus^ control, the base of leverage is
lost, the capitalist vantage point is undermined, and the
managers through the bureaus swing into dominance. For
just as the capitalists cannot continue as the ruling class,
cannot continue even to exist, under a system of state owner-
ship and control of the economy, so they cannot rule through
a structure where sovereignty is localized primarily in the
bureaus.

It would, I think, be diflicult to exaggerate the significance
of this shift in the localization of sovereignty. It is, perhaps,
a secondary phenomenon in the entire social revolution through
which we are going. But it is a secondary phenomenon of a
symptomatic character. Just as, in the case of the outward
and evident symptoms of so many diseases, the nature of the
disease is most plainly grasped by observing the symptom,
minor in itself, so does this historical symptom reveal plainly
to us the nature of the social revolution we are studying.

144

XI

TOTALITARIANISM
AND managerial SOCIETY

T* HOSE NATIONS — RUSSIA, GERMANY, AND ITALY — WHICH

have advanced furthest toward the managerial social structure
are all of them, at present, totalitarian dictatorships. Though
there have been many dictatorships in the past, none of them,
in a complex culture at any rate, has been so extreme in form
as totalitarianism. Others have been as severe within the
limited realms of social life to which the dictatorship extended
But what distinguishes totalitarian dictatorship is the number
of facets of life subject to the impact of the dictatorial rule.
It is not merely political actions, in the narrower sense, that
are involved ; nearly every side of life, business and art and
science and education and religion and recreation and morality
are not merely influenced by but directly subjected to the
totalitarian regime.

It should be noted that a totalitarian type of dictatorship
would not have been possible in any age previous to our own.
Totalitarianism presupposes the development of modem
technology, especially of rapid communication and trans-
portation. Without these latter, no government, no matter
what its intentions, would have had at its disposal the physical
means for co-ordinating so intimately so many of the aspects
of life. Without rapid transportation and communication
it was comparatively easy for men to keep many of their
activities, or even their entire lives, out of reach of the govern-
ment. This is no longer possible, or possible only to a much
smaller degree, when governments to-day make deliberate
use, of the possibilities of modem technology.

Totalitarianism is so striking a feature of the present

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THE MANAGERIAL REVOLUllUN

social transition that it seems, to many persons, to define the
character of the transition. They tell us that the “ issue
is totalitarianism vs. democracy ” ; and, if a revolution is
taking place, they call it the “ totalitarian revolution.” This
is a very superficial point of view. No matter how important
totalitarianism may be, it is still necessary to separate from
the problem of totalitarianism the question of what kind of
society is being totalitarianized : for whose benefit and
against whom, with what economic and political institutions,
with what ideologies and beliefs ? When we hear, merely,
that Russia or Germany is “ totalitarian,” there is not much
that we have learned about them.

It is particularly difficult, in a discussion of totalitarianism
to exclude all moral and emotional considerations, as
throughout the present book I am rigorously excluding them.
Everyone has such powerful feelings, such acute moral
opinions, for or against totalitarianism that scientific under-
standing is gravely hindered. It is legitimate to believe that
there is often an element of hypocrisy or illusion in these
feelings. Frequently, in the United States, it is not totalitar-
ianism, but Russian or German, in general “ foreign,”
totalitarianism that is being objected to ; a ioo% American
totalitarianism would not be objectionable. And it is not at
all clear, from historical experience, how much the masses
are devoted to democracy when compared with other values
such as jobs ot food or reasonable security. In the terrible
and bloody history of mankind, modern totalitarianism is not
so startling an innovation as many spokesmen of the moment
try to make it appear. Lies, cruelty, terrorism, brutality are,
after all, normal, not exceptional, ingredients of human history.
For the purposes of our analysis, for the clarification of our
central problem, we must treat the question of totalitarianism
as we treat all the other questions. Our business is not to
judge it good or bad, not to express likes or dislikes, but to
analyze it in its relation to the problem of what is happening
to society.

For us, there are two chief questions in connection with
totalitarianism which must be raised and answered. First,

146

managerial society

wc must ask whether the development of totalitarianisipi is
not in conflict with one of the principal contentions of the
theory of the managerial revolution. According to this theory,
the ruling class of the new society now being bom is the
managers. But under totalitarianism does it not seem that
not the managers but political bureaucrats — Stalins and
Hitlers and Goerings and Goebbels and Mussolinis — are the
rulers ? Is it not a bureaucratic ’’ society rather than a
“ managerial ’’ society that is coming into being ?

Second, we must ask whether totalitarianism is to be the
permanent political frame of managerial society or whether
we may expect that totalitarianism will disappear, and the
political organization of managerial society be achieved along
different lines. In the preceding chapter we have seen one
decisive feature of the political organization of managerial
society which there is good reason to regard as permanent :
namely, the localization of sovereignty in administrative
boards or bureaus. This, however, is not necessarily identical
with totalitarianism, certainly not with an extreme type of
totalitarianism. Wc must ask whether, on the basis of such
a localization of sovereignty, totalitarianism will be eliminated
or considerably modified.

We have defined ‘‘ ruling class ” as consisting of the group
of persons which has (as a matter of fact^ not necessarily of
law or words or theory), as against the rest of the population,
a special degree of control over access to the instruments of
production and preferential treatment in the distribution of
the products of those instruments. In many societies, the
members of the ruling class in question have also, in their
own persons, administered the state : that is, have been the
governing ofiicials in the state apparatus. In feudal society,
for example, this was usually the case. But it has not always
been the case. In some societies, the state has been
administered^ its chief offices have been occupied, by persons
who were not themselves members of the ruling class, or rather
who were distinctly subordinate members of thc-^ ruling class,

H7

THE MANAGERIAL REVOLUTION

This has been the situation most of the time in capitalist
society. As we have defined “ ruling class/’ there is no doubt
at all that usually the chief members of the ruling class were
not to be found in high governmental office. The chief
members were the great industrialists and financiers.

This peculiarity is puzzling to many people and causes much
confusion in social thinking. The nominal rulers— presidents
and kings and congressmen and deputies and generals and
admirals — are not the actual rulers. This is often the fact.
Why it should be so does not have to occupy us. Certainly
it does seem odd that those officials who, apparently, are able
to command the armed forces of the state — upon which, in
the last analysis, the social structure rests — nevertheless are
not themselves the chief rulers. That they are not pre-
supposes a whole set of established social beliefs and attitudes
which condition and limit their actions. But, however, odd
there can be no doubt about the fact itself. In capitalist
society, the big industrialists and financiers’ get the chief
preferential treatment in distribution (get the largest propor-
tionate share of the national income), not the politicians. It
is the capitalists who, more than anyone else, control access
to the instruments of production : if the owner of a factory
wants persons kept out of his plant, he has the right to keep
them out ; and the armed forces of the state will back him
in that right. It is in such ways that the capitalist state acts
as a political agency of a ruling class which is not identical
with the state.

How will it be in the new society ? Will it be the
managers or the political bureaucrats who are the ruling
class ?

In the first place, we may observe that it really doesn’t make
very much difference which of the two groups is correctly to
be regarded as the new ruling class ; whether, as we might
put it, the bureaucrats are to be the servants of the managers
or the managers of the bureaucrats. In cither case, the
general structural and institutional organization will be the
same. The same type of economy, the same ideologies, the *
same political institutions, the same position for the masses

148

MANAGERIAL SOCIETY

would be found whether the state were bureaucratic ” or
“ managerial ” ; so that the difference may well be largely
one of words. Moreover, modern politicians — that is,
politicians of the types found in the present Russian and
German regimes and their counterparts in other nations —
are in reality not unlike modern managers. They direct
masses of people in ways analogous to those used by managers
in directing production ; they have similar habits of thought,
similar methods, similar manipulation of the possibilities of
advanced technology. Stalin or Hitler prepares for a new
political turn more or less as a production manager prepares
for getting out a new model on his assembly line.

Indeed, the very raising of the question of who will rule,
the bureaucrats or the managers, indicates the persistence of
modes of thinking carried over from capitalist society and not
strictly applicable to managerial society. The fact that in
capitalist society the ruling class was a different group from
the governing political administrators is largely the reflection
of more basic structural features of capitalist society to which
I have several times referred. Capitalist economy proper was
the arena of private enterprise, and the capitalist state, we
saw, was a limited state. The rulers of capitalist society, as in
every society, were those who ruled the economy ; and these
were not the persons who held the offices of political adminis-
tration. By the nature of the case, the latter, no matter how
supreme they were in their own limited realm, were, in the
entire social process, subordinate to the former.

In managerial society, however, politics and economics are
directly interfused ; the state does not recognize its capitalist
Umits ; the economic arena is also the arena of the state.
Consequently, there is no sharp separation between political
officials and captains of industry.’’ The captain of industry
h, by virtue of his function, at the same time a state official.
The ** supreme planning commission ” is indistingiiishably a
political and an economic institution. In capitalist society,
the capitalist controlled the state indirectly, in the sense that
the state backed up, when necessary, the capitalist rule over
the (private) economy and kept in force the capitalist economic,

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THE MANAGERIAL REVOLUTION

social, and legal relations. In managerial society the managers
become the state. To say that the ruling class, is the managers
is almost the same thing as to say that it is the state bureaucracy.
The two have, by and large, coalesced.

This need not mean that the same individuals^ in any given
nation, who are to-day or yesterday managers under capitalism
will be managers under managerial society. This will often
be the case, but we are interested in the class, not the particular
individuals who make up the class. The situation is no
different from that in the formative period of capitalism. If
the present managers do not, in the course of the social trans-
formation, take up the controlling positions in the new society,
other individuals will take their place — some capitalists, no
doubt (as some feudal lords became capitalists), some new-
comers, some who will be rewarded for services in the
managerial political movements. But, and this is the im-
portant point, the managers who are dislodged from ruling
positions will be replaced by other managers ; just as, formerly,
the individual capitalist who lost his place in the ruling class
was replaced by another capitalist.

In spite of the fusion between the state and the economy,
there will remain a certain differentiation between the
‘‘ politicians ” and the managers.’’ At the very least, there
will be a certain differentiation in function : some persons
will be primarily concerned with such activities as war,
propaganda, diplomacy, policing, and so on ; whereas others
will be directing primarily the immediate instruments of
economic production such as railroads and factories and farms
and the rest. This differentiation can easily be exaggerated.
It is partly based upon moral prejudices against regarding war
and propaganda and diplomacy and policing as economically
productive ” processes ; though, in a complex society, above
all in a society so integrated as that under a managerial
structure, no clear line can be drawn between them and the
remainder of the economy. Armies and police forces and
courts and fireside chats and prisons can be looked on as
among the means whereby society produces goods, when we
are observing how goods are actually produced and not how

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MANAGERIAL SOCIETY

we might like them to be produced. But let us still grant a
difference, though minimizing it.

In so far, then, as there is a differentiation between the
political bureaucrats and the managers in the new society,
we must conclude that it is the managers, not the bureaucrats,
who are the leading section of the new ruling class.

Political bureaucrats (in the narrower sense of those who
concern themselves primarily with such functions as war,
propaganda, diplomacy, and policing) cannot exist in isola-
tion. They must, on the one side, secure some measure of
acceptance from a considerable portion of the masses (a task
which is peculiarly their own to fulfil) ; but, in addition,
they must collaborate with other groups which occupy a
privileged and important place in the society. Otherwise
the bureaucrats would have nothing to operate with and
would be left stranded. During the Renaissance, the state
power became increasingly dependent upon, finally sub-
ordinate to, the capitalists, in part for very simple reasons.
For example, the princes and kings of the time had to have
money to pay the mercenary armies with which they fought
their wars or to equip voyages of exploration. They could
get sufficient money only from the capitalists. The bureau-
crats of to-day and to-morrow may think, in their own minds,
that they pursue an independent course ; but their projects,
their wars and displays and manipulation of mass sentiment,
all require enormous resources. In practice these can be
assured only through their collaborating with, and in the end
subordinating themselves to, those who are actually directing
the processes of production, to the managers. The sources
of wealth and power are the basic instruments of production ;
these are to be directed by the managers ; and the managers
are, then, to be the ruling class.

We shall return to this question in other connections, but
we may note here that Russia, Italy, and Germany already
provide evidence for this view, though an element of specula-
tion undoubtedly remains. So far as ‘‘ preferential treatment
in distribution ** (one of the two decisive tests of rule) goes,
there is no question that in Russia, the nation most advanced

^51

THE MANAGERIAL REVOLUTION

toward managerial structure, it is the managers — the directors
of factories and state trusts and big collective farms — who as
a group arc getting the largest proportionate share of the
nationd income. In Italy and Germany there arc still
capitalists getting a considerable share, but the tendency is
steadily toward a diminution of their numbers and importance,
while the share of the managers is big and increasing. As a
group, the managers probably already receive much more than
the remaining capitahsts, and of course much more relative
to their numbers than any other section of the population,
including the political bureaucrats.

Even in the matter of conirol of access to the instruments
of production, the relations are similar in spite of appearances.
In both Germany and Russia the managers decide in practice
who shall be denied access to a factory or a mine or a large
farm. Arms are in the hands of soldiers and police, but the
soldiers and police in practice ordinarily back up the decisions
of the managers, just as they back up decisions of the capitalists
in a capitalist nation. (Once again, we are not concerned
with why those with arms in their hands do not take all privi-
leges for themselves ; the fact is that they do not.) It might
be properly pointed out that at any time the GPU or the
Gestapo may oust a manager from his position and send him
to execution or a concentration camp. But, relatively speak-
ing, such cases, though conspicuous, do not happen so very
frequently. And, even more important, though the indi-
vidual manager may be removed, it is not a soldier or a
policeman, but another manager who takes his place, and who,
as a manager, takes on power, responsibility, and privilege.

The last reference suggests that there are conflicts between
the interests of the politidal bureaucracy, in the narrow sense,
and those of managers. These conflicts are not unlike those
which existed during the earlier periods of capitalism (when
a king might decide to behead or imprison a capitalist) and,
in fact, to some extent all through capitalism. There will
be other sources of conflict as well in managerial society.
From the point of view of the managen, for example, the
political bureaucracy will often seem (already seems) too

15®

MANAGERIAL SOCIETY

irresponsible, too much addicted to graft and, waste, too
unstable. Such conflicts presage changes within the structure
of managerial society. But in such changes there seems to
be every reason to believe that it will be the managers, whose
position is upon a firm technical and functional foundation
in modern society, who will display the greater degree of
stability and who will more and more gather unambiguously
into their hands the realities of social rule. Stalin, Hitler,
Mussolini, and the Stalins and Hitlers of to-morrow, will go,
some of them with violent political convulsions. The class of
managers will remain. From the vantage point which their
functional role in modern economy gives them, the managers
will strengthen and consolidate their social position, and will
establish society on a strong basis that will guarantee their
rule, whoever may be the figures who stand in the political
limelight.

Ill 4t ♦ ♦ * #

These last considerations are by no means unrelated to the
second question : Is totalitarian dictatonhip to be a per-
manent characteristic of managerial society, or is it likely
to be replaced by some other political form, specifically, by
some form of democracy ? Before trying to answer this
question, it will be useful to make sime that we know what
we mean by “ democracy.” ,

“ Democracy ” is sometimes thought to be the equivalent
of such vague abstractions as “ freedom ” or “ liberty.” These
latter words, however, do not contribute to clarification.
“ Freedom ” is by itself an incomplete term ; there is no
such thing as freedom pure and simple ; it must always be
fi'eedom from something and for something. Freedom along
certain lines always implies restrictions along other lines. If
I want to be free firom hangovers, I must restrict my fieedom
to drink large amoimts of alcohol. If a worker wants to free
himself from a job he doesn’t like, he will usually have to
restrict his intake of food, since he will have nothing to get
food with. A capitalist in capitalist society is free from feudal
levies, but subject to capitalist taxation. When the slaves of

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THE MANAGERIAT, REVOLUTION

the South were freed from chattel servitude, the planters
were no longer free to own slaves. It is physically and logically
impossible for any person or group to be free from everything ;
to be so would mean not to exist. In all societies, diffeient
groups of men are free to do certain specific things and not
free to do other specific things. The specific freedoms present
change from society to society and are different for various
groups within any given society. It is really hard to see
what it could mean to say — as so many people get emotional
satisfaction from saying — that one kind of society is, without
qualification, more free ” than another. In actuality, all
we can properly say is that one society is more free in certain
ways — and less free in other ways — .han another. In any
case, the notion of “ freedom ” does not help us understand
what “ democracy ’’ is.

Sometimes, also, we speak of “ social democracy ’’ and

economic democracy.” But here, too, we are seldom clear
to ourselves or others. Historically, ‘‘ democracy ” has stood
for a certain type of political institution or structure in society.
I shall accordingly restrict the term to its political sense.

There are many who would take it for granted that political
democracy means majority rule.” If, however, we examine
those political systems to which we actually apply the term

democracy,” it is certain that majority rule is not, by itself,
an adequate definition. There is no possible way of proving
that many political systems which we all agree in calling
dictatorial, including several of the dictatorships of the present
day, arc not accepted by majorities, often, perhaps, by larger
majorities than accept the prevailing political order in de-
mocracies. One may doubt this in particular cases, but no
one can deny it for all instances.

The key characteristic of democracy ” as we use the
word (whatever it may have meant to the Greeks who invented
it) is the granting of the right of political expression to
minorities. More fully : democracy is a political system where
policy is decided, directly or indirectly, by a majority, and
where minorities, differing in their opinion from the majority,
have the right of political expression and the opportunity,

154

MANAGERIAL SOCIETY

thereby, of becoming a majority. It is necessary to add —
because this is not obvious — that, under democracy, majorities
and minorities are determined by simple arithmetic summation,
by an adding up of individual opinions where each individual
counts as one (as by a show of hands or a marking of
ballots).

It can be seen at once that there has never been — and in
practice will never be — a ioo% democracy. Democracy is a
matter of degree, of more or less ; and it varies in several
dimensions. It can differ, for example, in the percentage of
the total population out of which the majority is determined ;
in the number of minorities to which the rights of political
expression are extended ; in how fully these rights are extended
and how many different kinds of question they apply to ; and
in the degree to which minorities are given facilities of public
expression equal to those of the majority.

No society has included the entire population in determining
majorities and minorities for political purposes. Children are
almost always excluded up to a certain arbitrarily decided age.
There are usually, in fact if not in law, additional restrictions
as well ; sex and property and class and birth qualifications.
In the much-talked-about Athenian democracy, suffrage was
the prerogative of the members of the original tribes of Attica.
The slaves, who made up half of the population, were excluded,
as well as the numerous foreigners,” many of whose families
had been residents for generations. In the Florentine de-
mocracy of the later Middle Ages, during certain periods only
the members of the great guilds voted ; for a while, oddly
enough, even the nobles were excluded by law and in fact.
Those regarded as insane and certain classes of criminals are
almost always excluded.

No democracy has extended the right of public political
expression to any and all minorities. A minority must, as
a rule, be of a certain sufficient size : a minority of one is
usually put in any asylum, not accorded political rights.
Moreover, there is a variation in the extent of the public-
expression rights given to minorities. In the theory of a

perfect democracy, a i^inority should no doubt receive

155 ^

THE MANAGERIAL REVOLUTION

just the same public-expression rights as the (temporary)
majority — otherwise the population as a whole does not have
a fUlly adequate basis for deciding between majority and
minority. In practice it does not happen this way, and
probably could not : in the modern world this would mean
that the minority would have the same opportunities (and be
provided with the material means for these opportunities)
in the press, radio, schools, churches, movies, and all the
other mediums utilized by the majority. Furthermore, there
are always, in fact, restrictions about the limits of demo-
cratically acceptable opposition. When the minority goes
beyond these limits it is not given rights to propagate its views,
but suppressed as “ subversive ” or “ criminal ” or “ vicious.”

It is necessary to review these features of democracy in
order to stress the point that there have been many kinds
and degrees of democracy. Democracy such as England and
France and the United States have recently known is only
one kind among many others. Democracy as a political
system, moreover, is in no way incompatible with class rule
in society. On the contrary, all the democratic systems of
history have operated in conjunction with one or another type
of class rule. And, naturally, the general social character of
the democracy differs in accordance with the different structure
of the society in which it is found. The democracy of
Athenian slave society is not the same in general sociad
character as the democracy of capitalist England. Modem
totalitarianism, since it denies any rights of public political
expression to all minorities, is certainly not, by our definition,
a democracy. But when we ask whether, in the future
development of managerial society, totalitarianism will give
way to democracy, we are not asking whether a democratic
system exactly like what we haye had in the United States
will be revived. If managerial society becomes democratic,
it will have its own kind of democracy, not a kind that
accompanied a previous social structure.

There have been many democracies, differing in kind and
degree, in history ; and there have been many dictatorships.
(It is not, of course, our task to inquire into the moral problem

156

MANAGERIAL SOCIETY

of which is the ‘‘ better ’’ form of political rule.) Dictator-
ships have occurred under many historical circumstances.
But there seems to be one type of situation out of which
dictatorships very readily develop : namely, a period of
social crisis and major transition. This seems rather natural,
when we come to think about it. When established institu-
tions and ideas are falling to pieces, are being sharply chal-
lenged by opposing institutions and ideas, society loses
cohesiveness. Strong and ruthless hands reach in to put it
together again. The present is such a period of social crisis
and major transition.

The analogies between the dictatorial politics of the present
and the politics of the period of transition from feudalism to
early capitalism arc striking. Then, too, (in the sixteenth
and early seventeenth centuries, for example), there was a
succession of conspicuous dictators whose ruthlessness and
brutality have been obscured only because of the glamorous
way in which romantic historians have written about them.
Their dictatorships were not totalitarian, it is true, because
they did not have at their disposal the technological means
for totalitarian politics, but they were extreme enough in their
own terms. Francis I, Charles V, Henry VIII, the kings of
Spain and Portugal ... a dozen could be named without
difficulty. Their actions parallel surprisingly, in terms of
their own age, the actions of contemporary dictators. They
expropriated the property of institutions they opposed (Henry
VIII and the Church property), converted the Inquisition
into a political instrument (Spain, Italy), lied and broke faith
and treaties, held public trials of dissenters (Thomas More,
Bruno, Campanella), demanded loyalty oaths ’’ from every-
one, harried and pillaged and put to death tens upon tens
of thousands of opponents (peasant wars, wars of religion,
persecutions of heretics). . . .

The parallel is even more remarkable in that we find it
extends also to the ideological realm. To-day we are told about
the ‘‘ leader principle,’’ which is used to ideologize the political
position of fhc dictator. In the sixteenth century men were
t^ld about the doctrine of ‘‘ the divine right of kingSj” which

157

THE MANAGERIAL REVOLUTION

was used to ideologize the political position of the dictators
of that time. (Even Shakespeare, in his plays, reinforced
the “ divine right ” ideology.) The doctrine of the divine
right of kings was, from one most important point of view,
simply a sixteenth-century version of to-day’s theory ol‘
“ leadership.”

The social problem which the managers and the coming
managerial society face is, in general, analogous to that faced
in the sixteenth century by the early capitalists and the rising
capitalist society — though the capitalists did not and the
managers do not, needless to say, face their problem explicitly
and scientifically. The capitalists of the sixteenth century
were, we might say, carrying on a triple battle : against the
feudal lords, whose interests were bound up with the decaying
social order ; against the masses, who, though obscurely,
were a social force working against oppression and class rule
of any kind ; and against each other for first prizes in the
new world. The battle was carried on with the help of
dictatorial political methods. The feudal lords were reduced
to social impotence. The struggle with the masses continued
always in one way or another, but, after armed and bloody
suppressions and, above all, after the new capitalist institutions
and new ideologies contributing to the defence of these insti-
tutions became consolidated, was less acute. The third aspect
of the triple battle went on ; though, after the reduction to
a subordinate place of Italy, Spain, Portugal, and Germany,
and as long as many new sections of the world remained open
for adventure, it, too, was less sharp and dangerous. With
the firm consolidation of the new society, the dictatorial
political system began to give way — sometimes gradually,
sometimes to the accompaniment of civil wars — to democratic
systems.

To-day the managers are carrying on a similar triple battle
l[lct us recall here, as always when we use the language of
iht class struggle, the partly metaphorical character of that
language) : against the capitalists, whose interests arc bound
up with the decaying social order ; against the masses^ who.
Obscurely, are a social force tending against oppression and

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MANAGERIAL SOCIETY

class rule of any kind ; and against each other for first prizes
in the new world. The hold of the capitalists on the instru-
ments of production must be smashed. The masses must be
curbed, and as many as possible of them diverted so that their
weight is thrown into the scale on the side of the managers
and of the new social structure. The various sections of the
managers contend with each other, on a world scale, for
mastery. This is a complex process with its elements so
intertwined that it is often hard to see through to the major
forces. But comparable processes in history indicate that it
is worked out by wars and revolutions and persecutions and
terror, and by the clash also of rival propaganda and ideologies,
all under a bewildering variety of slogans and ostensible
motivations.

In such a period political rule tends to concentrate undei the
form of dictatorship. We already know, without speculating
about the future, that this is what is happening to-day. But
when the transition is accomplished, the situation changes.
The capitalists will be eliminated or rendered impotant and
negligible. The new institutions and ideologies will be con-
solidated on at least semi-stable basis. The masses will be
curbed, partly by armed suppression, partly through the
consolidation of the managerial institutions and ideologies,
which will have, as one effect, the shifting of the struggle of
the masses from the revolutionary aim of the transition period
— when the old society is going to pieces — to reformist aims
within the now-established structure of a new society that has
a historic period still before it. The contests among different
sections of managerial society will still continue ; but the
elimination of the first of the elements of the triple battle and
the lessening of the second will make the third less devastating
in its over-all effects on social structure.

Historical analogy, then, suggests that with the consolidation
of the structure of managerial society, its dictatorial phase
(totalitarianism) will change into a democratic phase.

This conclusion is reinforced by two additional considera-
tions. In the first place, it would seem that the managers
the ruling class of the new society, will for their own purposes

^59

THE MANAGERIAL REVOLUTION

require at least a limited democracy. The managerial
economy cannot operate without a considerable degree of
centralized planning. But in planning and co-ordinating the
economic process, one of the factors that must be taken into
account is the state of mind of the people, including something
of their wants and of their reactions to the work they arc
doing. Unless these are known, at least roughly, even
reasonable efficiency in production is difficult. But totalitarian
dictatorship makes it very hard — as Russia especially already
proves — to get any information on the actual state of mind
of the people : no one is free to give unbiased information,
and the ruling group becomes more and more liable to mis-
calculate, with the risk of having the social machine break
down. A certain measure of democracy makes it easier
for the ruling class to get more, and more accurate,
information.

Secondly, experience shows that a certain measure of
democracy is an excellent way to enable opponents and the
masses to let off steam without endangering the foundations
of the social fabric. Discontent and opposition, under an
absolute dictatorship, having no mechanism for orderly
expression, tend to take terroristic and, in times of crisis,
revolutionary forms. The example of capitalist parliaments
shows how well democratic possibilities are able to make
discontent and opposition harmless by providing them with
an outlet. Faced with the threat of trouble from the sub-
merged and imderprivileged groups, and with the need for
mediating conflicts within its own ranks, the new ruling class
will doubtless prefer a controlled democracy rather than the
risk of social downfall.

Important internal requirements of managerial society thus
unite with historical analogy to indicate that totalitarianism is
temporary and will be succeeded by some type of democratic
political system. There arc, however, certain special factors
that seem to weigh against this prediction.

Democracy, within a class society, must be so limited as not
to interfere with the basic social rdations whereby the ruling
class maintains its position of power and privilege. In some

i6o

MANAGERIAL SOCIETY

democracies, this is accomplished by the easy device of restrict-
ing political rights altogether or for the most part to members
of the ruling class itself (to, for example, slaveholders in a slave
society or landholders in an agricultural society). When the
vote has been extended to wide sections of the population,
including a majority that is not members of the ruling class,
the problem is more difficult. In spite of the wider democracy,
however, control by the ruling class can be assured (as under
capitalism) when major social institutions upholding the
position of the ruling class arc firmly consolidated, when
ideologies contributing to the maintenance of these institutions
are generally accepted, when the instruments of education
and propaganda are primarily available to the ruling class,
and so on. In such cases the governmental changes brought
about through democratic processes may be real enough, but
they do not threaten the fundamental structure of society :
they all revolve within the given framework of basic institutions
and ideas.

The capitalists kept in control of society, including, on the
whole, the various governments, through their de facto control,
in their own names, of the major instruments of production, a
control which was recognized and accepted by society through
the rjccognition and acceptance of the chief institutions and
ideas of capitalism. But the managers, in managerial society,
are in an entirely different relationship. Ownership of the
instruments of production is formally vested in the state. The
managers can maintain their ruling position only, then,
through assuring for themselves control of the state, and thus,
indirectly, of the instruments of production. But to guarantee
this control of the state without dictatorship, with democracy —
that is, freedom for public minority political expression — ^is
not so simple. So far, the development toward managerial
society has been everywhere accompanied by the tendency
toward a one-party monopoly in the political arena, a
tendency which has reached completion in most countries.
A one-party monopoly would seem to be incompatible with
democracy, since public political expression for minorities
means the existence of opposition parties whether or not they

i6i

THE MANAGERIAL REVOLUTION

are called parties. It is not yet clear whether the social
relations of the new society could be guaranteed in any other
way than through a one-party monopoly.

Moreover, the economic structure of managerial society
seems to raise obstacles to democracy. There is no democracy
without opposition groups. Opposition groups cannot, how-
ever, depend for their existence merely on the good will of
those who are in power. They must have some sort of in-
dependent institutional base in society so that they can put up
meaningful resistance and not be wiped out at an oflSciars
casual nod. In decentralized economies, oppositions are able
to base themselves on some section of the economy, since no
one and no group controls the economy as a whole. Opposi-
tions can be based on one large branch of the economy as
against others, on agriculture as against industry, on heavy
industry as against light industry, on labour as against capital.
But the centralization of the economy under the managerial
structure would seem to remove these possibilities. All major
parts of the economy will be planned and controlled by the
single integrated set of institutions which will be the managerial
state. There would seem, then, to be no independent
economic foundation for genuine opposition political groups.
Democracy will, perhaps, have to seek a different kind of
institutional base from that which has traditionally supported it.

The problem is added to when we keep in mind the political
institutions of the new society, which we have already dis-
cussed. Sovereignty, we have seen, is localized in boards or
bureaus, and there seems every reason to think that this will
continue to be the case. How, then, in terms of political
institutions, would democracy be able to function ? It would
have to be a non-parliamentary democracy. The 1937 Soviet
Constitution nominally revived parliament, but kept the one-
party monopoly and the localization of sovereignty in the
bureaus. The result was a foregone conclusion, whatever
were the intentions of the drafters of the Constitution : the
parliament (the two-house Soviet Congress) is a mere sounding
board and propaganda agency, and not a fraction of a step
was made toward democracy.

162

MANAGERIAL SOCIETY

It may be that democracy could be introduced through the
localization of political opposition in such institutions as
syndicates, co-operatives, technical associations, or others of
the same order not yet known. These institutions would then
become, in reality, opposition political parties, though the
fiction of a one-party monopoly could be kept up. The
governmental bureaus would feel the impact of their influences,
and mechanisms could easily arise for mediating conflicts.
This is not at all an empty speculation. Something of this
kind already takes place in the totalitarian nations. In spite
of the surface rigidity, it represents a democratic intrusion,
capable of indefinite development, in the totalitarian political
systems. Democracy grown along these lines would be able
to function, up to a point, without being a dangerous threat
to the social rule, the power and privileges, of the managers
or to the foundations of the new society.

On the whole, it seems to me that a later democratic develop-
ment in managerial society is likely. It would, however, be an
error for those who like democracy to be over-optimistic about
it. It is not certain on the evidence so far. And it does not
seem indicated for the next day or year or decade. This
much is clear : The democracy of capitalist society is on the
way out, is, in fact, just about gone, and will not come back.
The democracy of managerial society will be some while being
born ; and its birth pangs will include drastic convulsions.

x6s

XII

THE WORLD POLICY OF
THE MANAGERS

Under the political system of capitalism, we have
seen, there existed a comparatively large number of com-
paratively large nations. Each of these nations claimed
sovereignty for itself. On a world scale, a considerable part
of the world’s territories and peoples was controlled, in a
subject status, by the few most powerful of the advanced
nations.

It does not take a prophet to know that under managerial
society this political system is to be radically altered. A
prophet is not needed because the radical change is already
taking place, at mounting speed since the beginning of the
second world war. One after another of the sovereign
capitalist nations are being either wiped out altogether or
stripped of the attributes of sovereignty. What is to be the
outcome of this process in terms of world political structure ?
This is the question which I propose to examine, and answer,
in the present chapter.

Sovereignty for a nation implies that the nation makes laws
for itself and recognizes no superior lawmaker. It means that
the nation sets up tariffs and other import and export controls,
regulates its own foreign policies and its own currency, and
maintains civil, diplomatic, and military establishments. The
simultaneous existence of many sovereign nations in the
modem world necessarily means an anarchic situation in
world politics. This must be because, since each sovereign
nation recognizes no lawmaker superior to itself, there is in the
end no way except by force to mediate the deep conflicts that
arc bound to arise among the various nations.

164

WORLD POLICY OF THE MANAGERS

Experience has shown that the existence of a large number of
sovereign nations, especially in Europe (and with somewhat
less acuteness in Latin America), is incompatible with con-
temporary economic and social needs. The system simply
does not work. In spite of the fact that the post-Versailles
European arrangements were set up and guaranteed by the
most powerful coalition in history, which had achieved victory
in the greatest war of history, they could not last. The com-
plex division of labour, the flow of trade and raw materials
made possible and demanded by modern technology, were
strangled in the network of diverse tarifis, laws, currencies,
passports, boundary restrictions, bureaucracies, and indepen-
dent armies. It has been clear for some while that these were
going to be smashed ; the only problem was who was going
to do it and how and when. Now it is being done under the
prime initial impulse of Germany.

Anyone who believes that there is the slightest chance for the
restoration of the pre-1939 system in Europe is living in a
world of fantastic dreams, not on the earth. The United
States can keep declaring from now forever that it will never
recognize alterations of boundaries brought about by force
(the only way in which important alterations have even been
brought about in history, including those alterations accom-
plished by the United States), and London and Washington
can continue “ accepting ” the dozen refugee governments
that run from one capital to another and will doubtless end up
at the North Pole ; but these highly moral fictions arc not
going to pump back one drop of blood into the veins of a
political system which is already dead.

* * * * , •

If political problems were settled by scientific reasoning, we
should, most probably, expect that the political system of
managerial society would take the form of a single world-
state. In this way the anarchy necessarily following from
conflicting sovereignties would be wholly eliminated. World
production could be organized on the most eflicient plan wiflbi
the maximum utilization of world resources and the most

165

THE MANAGERIAL REVOLUTION

effective division of labour. Unnecessary duplications could
be avoided, and land, climate, peoples, and resources could be
exploited in the most fruitful way. Such a world-society is
a goal which Marxists, pacifists, and many others before them
have had. If we stick to formal and moral arguments, a
powerful case can be made out for it.

Even when we come down to cruder realms, it is not im-
probable that some of the managers and their political
colleagues are also looking toward a world-state, if not as a
triumph of justice and logic, then as an aim of power. In
particular, it may well be that Hitler and some of his associates
have something of the sort in mind ; and some alt least among
the bolder spirits in the United States. Moreover, it is likely
that wars will be fought which will have a monopoly of world
power as the aim of the participants.

Nevertheless, it is extremely doubtful that the world political
system of managerial society will be organized, within the dis-
cernible future, as a single world-state. If we leave words and
get closer to practical details, the organization of the entire
world under a single sovereign-state power seems to present
difficulties that are close to insuperable. These difficulties
are of many kinds.

First, there are technical and administrative difficulties. The
centralized direction of the whole world and all its peoples
would be a task beyond the technical ability of any human
group so far as we can judge from the behaviour of human
groups in the past. The job is just too vast. Second, there is
the military and police problem : There seems no reason to
believe that any state can organize a military group sufficiently
large and sufficiently cohesive to be able to patrol the whole
world. Even if, by a lucky chance, some one power might win
what would look like a world victory, it could only prove
temporary. The disintegrative forces would be sufficient to
pull it rapidly to pieces. Third, the ethnic, cultural, social,
and climatic diversities of the world are so considerable as to
preclude its reduction to a political unity ; and these diversi-
ties, even if they are not permanent, will continue for as long
as we can sensibly pretend to predict about. A wcwrld state

i66

WORLD POLICY OF THE MANAGERS

would presuppose a large rueasure of general social unity
among men : in interests, in culture, in education, in material
standards of life. No such unity exists, nor, under the class
structure of managerial society, can be expected to develop.

At the same time the capitalist system of a comparatively
large number of sovereign states cannot continue, and is, in
fact, collapsing right now. What is going to take its place ?

The answer, in general terms, is not obscure ; and, as with
so many other questions, does not have to be given by idle
speculation about the dim future. The working out of the
answer started some time ago and is now going on quickly
before our eyes. The comparatively large number of sovereign
nations under capitalism is being replaced by a comparatively
small number of great nations, or “ super-states,” which will
divide the world among them. Some of the many nations
which are eliminated in fact may be preserved in form ; they
may be kept as administrative sub-divisions, but they will be
stripped of sovereignty. Sovereignty will be restricted to the
few super-states.

It might seem rash to try to predict just how many of these
super-states there will be. Certainly we cannot be sure just
how long it will take to consolidate the world political system
of managerial society or just what stages will be gone through.
Nevertheless, the main outlines and the final sketch of the final
result are already clear.

If we look at an economic map showing the occupations of
mankind, a decisive fact is at once apparent. Advanced in-
dustry is concentrated in three, and only three, comparatively
small areas : the United States, especially its north-eastern
and north-central regions ; Europe, especially north-central
Europe (Germany, the Netherlands, Belgium, northern France,
England) ; and the Japanese islands together with parts of
eastern China. It is advance industry, needless to say, which
makes the goods with which modern wars are fought and
won, as well as the other key goods upon which modern
culture depends. The economic map suggests dramatically
what is probable on many other grounds : that the world
political system will coalesce into three primary super-states,

167

THE MANAGERIAL REVOLUTION

each based upon one of these three areas of advanced
industry.

This does not necessarily mean that these three super-states
will be the United States, Germany, and Japan as we know
them to-day. This may well be the case, but it need not be
so. In these nations there may be internal convulsions which,
together with foreign military struggles, will seem to break
their continuity with the past. Nev/ names may be used.
This would, however, be of secondary importance in the
long run.

It should go without saying that the mechanism whereby
this new political system will be built is and will be war.
War is the only mechanism that has ever been employed for
similar purposes in the past, and there is not the slightest
indication — certainly not at the opening of 1941 ! — that any
other is going to replace it.

*****

We are now in a position to understand the central historical
meaning of the first two world wars of the twentieth century.
We might put it, over-simplifying but not distorting, in this
way : The war of 1914 was the last great war of capitalist
society ; the war of 1939 is the first great war of managerial
society. Thus both wars are transitional in character, are wars
of the transition period between capitalist and managerial
society. In both wars we find both capitalist and managerial
elements, with the former predominant in the war of 1914,
the latter immensely increased in the war of 1939.

This political characterization of the two wars correlates
with and reinforces the conclusions we have reachetj' in our
economic analysis, and again motivates our selection of the
year, 1914, as the beginning of the social transition to
managmal society. We found that from the late Middle
Ages until the first world war, the percentage of world economy
under the control of capitalists and capitalist economic relations
had continuously increased ; but from that time on has, also
continuously and at a growing speed, declined. Looked at
politically, we may say that from the midst of the. first world

168

WORLD POLICY OF THE MANAGERS

war came the first great abrupt jump toward manageria
society — the Russian Revolution. That war and its aftermath
(the ‘‘ Versailles system ”) gave the final proof that capitalist
world politics could no longer work and were about to end.

From the war of 1939 are coming more major political
leaps. But this is only the first, not the last, war of managerial
society. There will be much still to be decided after the
present struggle is over — though, since war and peace are
no longer declared, it may be hard to know when this struggle
is over and the next one begins. The immediate war will
not even complete the consolidation of the managerial struc-
ture of society ; and after it is completed there will still be
wars, for there will remain plenty to fight about.

I have predicted the division of the new world among
three super-states. The nuclei of these three super-states are,
whatever may be their future names, the previously existing
nations, Japan, Germany, and the United States.

It is of great significance to note that all three of
these nations began some while ago their preparations for
the new world order. The preliminary period is one of the
consolidation of strategic bases — which means, above all, the
three areas of advanced industry, together with the positions
necessary for the protection of these areas. Since entering
Manchuria, Japan has got hold of almost all of her area
and is branching out from it. Germany widened her base at
first without open war (the Saar, Austria, Czechoslovakia . . .)
and now is completing its consolidation through the war.
The United States began on the ideological front, with
the Pan-American conferences and the propaganda of the
“ hemisphere policy,” and is recently beginning to make
up for lost time by taking more practical steps, such as
the defence agreements with Canada, the acquisition of the
Atlantic bases, and the concrete implementation of the
hemisphere policy.

However, the “ consolidation of the strategic bases ” is only
the first phase. The fundamental theme of the wars of the
future — ^into one of which the second world war was already
evolving by the latter part of 1940 — will be the clash among

169

THE MANAGERIAL REVOLUTION

the three areas which constitute the three main strategic
bases. Ostensibly these wars will be directed from each base
for conquest of the other bases. But it does not seem possible
for any one of these to conquer the others ; and even two of
them in coalition could not win a decisive and lasting victory
over the third.

What will be actually accomplished by these wars will not
be a decision as to who is to rule the bases — for Americans
are going to rule here, Europeans in Europe, and Asiatics
in Japan and East China — but decisions as to what parts
and how much of the rest of the world are going to be ruled
by each of the three strategic centres. It might be thought
that a “ rational ” solution could be worked out along
“ natural ” geographic lines, dividing the world into three
parts, as the pope in the sixteenth century tried to divide
the non-European world between Spain and Portugal. But
men do not solve their problems in such a way in the twentieth
any more than in the sixteenth century. Geography gives
certain advantages to each of the contestants in certain areas :
to the United States in the northern two-thirds of the two
Americas ; to the European centre in Europe, the northern
half of Africa and western Asia ; to the Asiatic centre in
most of the rest of Asia and the islands near by. But there
is much left over, and, besides, the rivals will not be willing to
admit any “ natural ” geographic right. As in the sixteenth cen-
tury, the wars that are coming, not a pope, will draw the maps.

This struggle among the three strategic centres for world
control will be tlie fundamental theme of the coming wars of
managerial society. Naturally, the fundamental theme will
be obscured and complicated, and will be played with varia-
tions. The theme oidy begins to emerge during the present
war' — though it is daily clearer. Capitalism is not yet dead,
and the wars of the present are not “ pure ” managerial wars.
They are also completing the destruction of capitalism, not
merely by the effects of military defeat, but also by the internal
consequences of war regimes under modem conations. And
the consolidation of the three super-states, even within their
immediate strategic areas, is not by any means finished. In

170

WORLD POLICY OF THE MANAGERS

Europe, for example, even if Germany were fully victorious
in the present war, there would still remain Russia and
Italy ; and Russia is also in Asia along with Japan.

Everyone knows, however, that Italy is a subordinate, in-
capable of a really independent sovereign policy. There is
every reason to believe (as we shall discuss in Chapter XIV)
that Russia will split apart, with the western half gravitating
toward the European base and the eastern toward the Asiatic.
But even if a coalition of the future, combined witli internal
disturbances, should overthrow the Germany of the present,
this would be secondary to the main scheme. The result of such
a development would not alter the political system toward which
managerial society tends. It would merely change tlie name
and some of the leading personnel of one of the super-states.

The coming years will also include wars of another type —
indeed, these began several years ago : wars of the metro-
politan centres against backward areas and peoples. The
backward areas, which include a majority of the territory
and people of the world, are not going to line up automatically
behind one or another of the three centres or merely stand
aside while the three fight over them. In the dissolution of
the capitalist world political structure and during the in-
'ternecine conflicts of the great managerial states, the back-
ward peoples will attempt to break free altogether from
domination and to take their destiny into their own hands.
Often such uprisings will occur in connection with wars among
the chief managerial powers. However, it is doubtful that
any of the backward peoples will be able to win independence
(except, perhaps, in form and title). They do not have the
technological resources to conduct modern war successfully
or to compete more or less evenly from an economic point
of view — which is also necessary for independence to-day.
They will have, to gravitate toward one or another of the
great camps, even if they have some temporary success in a
struggle for independence.

This is already seen during the course of the second world
war. There is no doubt that the Indian masses want inde-
pendence firom Great Britain and sovereignty for themselves.

171 M

THE MANAGERIAL REVOLUTION

Under the given circumstances, however, they are held back
from a struggle for independence, not merely by the cowardice
of many of their leaders, but because many of the leaders
correctly understand that Indian independence could not be
firmly established. Revolt against Britain would link them
and finally subordinate them to Germany or Russia. A similar
dilemma confronts the Arabs of the Near East. In Latin
America the situation is analogous : the nations, unable to
stand on their own feet in the coming world, shilly-shally
back and forth. With Britain, formerly the mo?t influential
nation in Latin America, dissolving, the only realistic alterna-
tive they face is subordination to the United States or to the
new European centre. Their own choice as to this alternative
does not make much difference, since the issue will be decided
by the relative strength of the United States and the European
centre.

These remarks would seem to apply to the whole world.
Everywhere, men will have to line up with one or the other
of the super-states of to-morrow. There will pot be room
for smaller sovereign nations ; nor will the less advanced
peoples be able to stand up against the might of the metro-
politan areas. Of course, pohte fictions of independence may
be preserved for propaganda purposes ; but it is the reality
and not the name of sovereignty about which we are
talking.

The managers under the structure of the new economy will
be able to solve one of the difficulties which we saw has been
confronting capitalism and which is an important element in
the downfall of capitalism : namely, capitalism’s inability any
longer to exploit and develop the backward areas successfully.
Capitaliiyn cannot do it to-day (as, for example, the United
States in Latin America) because it is no longer profitable
from a capitalist standpoint. There is no longer the profit
incentive sufficient to draw idle private funds from their
present unfruitful storehouses. Even now, when the war has
left the Latin American door wide open, business men and
bankers in the United States do very little. They cannot be
persuaded to pump in large investments or to undertake

17a

WORLD POLICY OF THE MANAGERS

important enterprises. And they are right, for they know
from hard experience of late years that this would be un-
profitable. The government, through such devices as the
Export-Import Bank, and other grander devices to come,
has to take over. The managerial state does not have to
make a capitalist profit ; and as the capitalist relations are
liquidated the managerial state will move ahead to a new
stage in world colonial and semi-colonial development.

Germany, in its economic relations with lesser and sub-
ordinate a!rea4y shown some of the ways in which

it can years all of the orthodox economists have

been proviagPI^; German trade dealings with the Balkans,
South America, Russia, and so on “ hurt ” German economy
rather than helped it — because, of course, these dealings are
“ uneconomic,” that is, unprofitable in a capitalist sense.
This conclusion follows only when the reasoning is carried
out in terms of capitalist economic relations. The fact is that
the dealings keep people employed in both Germany and the
subordinate nations, and bring about exchanges of goods and
services held to be of value by both sides, especially by
Germany. To prove that such trade cannot be carried on
profitably is not to prove that it won’t be carried on, but
only that it will not be under capitalism.

Such political predictions as I have herein outlined are very
much resented in the United States. Our official doctrine
still continues in the Wilson tradition : international law and
morality ; rights of small nations ; non-recognition of terri-
tories acquired by force. Washington continues to be crowded
with diplomatic representatives of nations which no longer
exist. I have no wish to quarrel with the way people like to
talk and think and feel, or how they like to use words ; my
purpose is to discover what is probable on the evidence. In
spite of what our spokesmen in the United States say, I do
not really think that there are many serious persons here or
anywhere else who do not judge the probabilities pretty much
as 1 do.

Does any serious person seriously think that the European
Continent is again going to be divided up into a score of

*73

1 HE MANAGERIAL REVOLUTION

sovereign nations, each with its independent border guards,
tariffs, export restrictions, currencies, forts, armies, bureau-
cracies . . . ? I doubt that anyone really thinks so. If it
didn’t work after Versailles, when conditions were a hundred
times more favourable, when mounting mass unemployment
and permanent economic depression were not yet inescapable
features of capitalism, it is certainly not going to work to-day
or to-morrow. It is not a question of what we would like,
but of what is going to happen. Even the British propa-
gandists have been compelled to speak in terms of a “ United
States of Europe — that is, a European consolidation under
the dominance of England in which the participating states
would necessarily give up the rights of sovereignty. The only
thing wrong in this conception is the notion that this con-
solidation could be achieved under a capitalist social structure
with the British Empire remaining capitalist and undisturbed.
And what are all these schemes of “ Union Now ” but polite
phrases for a possible way of consolidating one of the super-
states of the future under United States control ?

It is still more important, and ironic, to observe that for
all the talk by the official spokesmen, the United States acts
to-day in accordance with the predictions of this chapter.
The United States is consolidating its strategic base in the
northern two-thirds of this hemisphere and preparing to do
battle against either or both of the two great rivals — the
European centre and the Asiatic centre — for its share in the
new world. That its actions are more hesitant than those
of its rivals, especially the European rival, is due simply to
the fact that the United States to-day still retains more of
capitalism and that capitalists and capitalist ideologies still
arc more powerful in the United States than managers and
managerial ideologies. But in spite of this, the realistic calcu-
lations of the leaders, and particularly the future leaders, of
the United States are based upon predictions the same in
content as these I have stated* It could hardly be otherwise,
since these are plainly written by the facts of yesterday and
to-day. In politics, acts and the consequences of acts are far
more revealing than words.

*74

XIII

THE MANAGERIAL IDEOLOGIES

J^LL ORGANIZED SOCIETIES ARE CEMENl'ED TOGETHER, NOT

merely by force and the threat of force, and by established
patterns of institutional behaviour, but also by accepted ways
of feeling and thinking and talking and looking at the world,
by ideologies. No one to-day will deny the crucial social
function of ideologies, though we are always more critical
about others’ ideologies than about our own. Indeed, many
of us like to feel ourselves free from the influence of any
ideology, though we are seldom prepared to grant such en-
lightenment to anyone else. A soc iety cannot hold together
unless there is a fairly general acceptance on the part of
most of its members, not necessarily of the same ideology,
but, at any rate, of ideologies which develop out of similar
root concepts as starting points.

Scientific theories are always controlled by the facts : they
must be able to explain the relevant evidence already at hand,
and on their basis it must be possible to make verifiable
predictions about the future. Ideologies are not controlled
by facts, even though they may incorporate some scientific
elements and are ordinarily considered scientific by those
who believe in them. The primary function of ideologies —
whether moral or religious or metaphysical or social — is to
express human interests, needs, desires, hopes, fears, not to
cover the facts. A dispute about scientific theories can always
be settled, sooner or later, by experiment and observation.
A dispute between rival ideologies can never be thus settled.
Arguments about ideologies can, and do, continue as long as the
interests embodied by them are felt to be of any significance.

After that they become curiosities to be studied by

m

THE MANAGERIAL REVOLUTION

philosophers or anthropologists. There can never be, as there
arc in the case of scientific theories, satisfactory tests for the
“ truth ” of ideologies, since in reality the notions of truth
and falsity are irrelevant to ideologies. The problem with
an ideology is not, when properly understood, whether it is
true, but : what interests does it express, and how adequately
and persuasively does it express them ?

However, though ideologies are not controlled by facts,
they are nevertheless subject to controls. In particular, the
major ideologies of a class society must be able to perform
two tasks : (i) They must actually express, at least roughly,
the social interests of the ruling class in question, and must
aid in creating a pattern of thought and feeling favourable
to the maintenance of the key institutions and relations of
the given social structure. (2) They must at the same time
be so expressed as to be capable of appealing to the sentiments
of the masses. An ideology embodying the interests of a
given ruling class would not be of the slightest use as social
cement if it openly expressed its function of keeping the ruling
class in power over die rest of society. The ideology must
ostensibly speak in the name of “ humanity,” “ the people,”
“ the race,” “ the future,” “ God,” “ destiny,” and so on.
Furthermore, in spite of the opinion of many present-day
cynics, not just any ideology is capable of appealing to the
sentiments of the masses. It is more than a problem of
skilful propaganda technique. A successful ideology has got
to seem to the masses, in however confused a way, actually
to express some of their own interests.

In a period of social transition, the ideologies of the , old
society are under attack by the rising ideologies of the society-
to-be, just as the institutions of the old society and the economic
and political power of the old ruling class are under attack.
The rising ideologies naturally devote much of their attention
to the negative task of undermining mass acceptance of the
old ideologies. \

Hie major ideologies of capitalist society, as we noted briefly
in an earlier chapter, were variants on the themes of: Utdi-
mdualim ; opportunity ; “ natural rights,” especially the ri^ts

176

THE MANAGERIAL IDEOLOGIES

of property ; freedom, especially ‘‘ freedom of contract ” ;
private enterprise ; private initiative ; and so on. These
ideologies conformed well to the two requirements stated
above. Under the interpretations given them, they expressed
and served the interests of the capitalists. They justified profit
and interest. They showed why the owner of the instruments
of production was entitled to the full product of those instru-
ments and why the worker had no claim on the owner except
for the contracted wages. They preserved the supremacy of
the field of private enterprise. They kept the state to its
limited role. They protected the employers’ rights of hiring
and firing. They explained why an owner could work his
factory full time or shut it down at his own discretion. They
assured the right of owners to set up factories or to buy and
sell wherever they might choose, to keep money in a bank
or in cash or in bonds or in active capital as seemed most
expedient. So long as ideologies developed from such con-
ceptions as these were not seriously and widely questioned,
the structure of capitalist society was reasonably secure.

At the same time, these ideologies were able to gain the
acceptance and often the enthusiasm of the masses. Men
who were not capitalists were willing to swear and die by
slogans issuing out of these ideologies. And, as a matter of
fact, the way of life embodied in these ideologies was for some
while beneficial to large sections of the masses, though never
to the extent advertised or in any way comparable to what
it was for the capitalists.

The capitalist ideologies are to-day in a very different
position from that which they held even a generation ago.
The differences are plainly written on the surface of events.

Once these ideologies provided the slogans for what nearly
everyone would call the most ‘‘ progressive ” groups in society
— among them the English and French and American revolu-
tionists — and in later times for groups which in any case were
not" the most conservative. To-day the same slogans, pro-
ceeding from the same ideological bases, are found most often
and most naturally among the words of what everyone recog-
nizes to be the most conservative, or even reactionary, groups

177

THE MANAGERIAL REVOLUTION

in society — those whom the New Dealers call the ‘‘ Tories,”
without much regard for historical propriety.

In the United States it is the Hoovers, the Lippmanns, the
Girdlers and Weirs and Willkies, the New York Herald Tribune
and the Chicago Tribune^ the leaders of the Chamber of Com-
merce and the National Association of Manufacturers, who
speak most readily in these terms. The “ Liberty League ”
was their organization. There are many who are outraged
by this phenomenon. They think that this sort of talk from
these sources is shocking hypocrisy and a fake. But this is
a naive analysis, made by those who do not know how to
relate words to social realities. There was nothing fake about
the Liberty League. The claim of the Tories to these slogans
and these ideologies is one hundred per cent, legitimate.
These are the slogans and ideologies of capitalism, and the
Tories are the bona fide representatives of capitalism. The
slogans mean for them what they have always meant in
practice for capitalism ; it is the world, not they and their
ideas, that has changed. If these slogans are now associated,
and correctly associated, with the most conservative (that is,
backward-looking) sections of society, that is because the old
structure of society, once healthy, is now breaking up and a
new structure is being built ; an old class is on its way out
and a new class marching in.

But, second and even more revealing, the capitalist ideologies
and slogans have largely lost their power to appeal to the
masses. This is not in the least a subjective and personal
opinion ; it may be perfectly well established by impersonal
observation.

Perhaps the most striking proof of the falling off in mass
appeal is provided by the complete failure of voluntary mili-
tary recruiting in England (as well as the entire British
Empire) and in the United States. This failure would in
itself be remarkable enough. When we remember that
voluntary recruiting was tried in England and in the United
States at a time when millions were unemployed, and with
the help of all the instruments of modern propaganda tech-
nique, the significance of the failure is immense. The recruiting

178

THE MANAGERIAL IDEOLOGIES

was conducted under slogans drawn from the capitalist
ideologies. The youth, though it had no jobs and no prospects,
simply did not respond. The armies must be gaAered by
compulsion. No one can challenge the fact ; and no one
who is honest about it can doubt the significance of the fact.

The second equally demonstrative proof is provided by the
advance of Hitler prior to the war and without war. In 1933,
in Germany itself, no group among the masses was willing
to risk life to stop the Nazi assumption of power ; Hitler took
power without a civil war. The capitalist ideologies did not
provide a sufficient incentive for heroism. In the Saar and in
the Sudetenland, the masses had had their experience of
capitalism and capitalist democracy. They chose Hitler and
Nazism. There is not the slightest doubt that overwhelming
majorities in both were in favour of becoming part of Hitler’s
Germany. It may be granted that terrorism and skilled
propaganda methods played some part in influencing opinion.
But to imagine that these were the full explanation would be
shallow and absurd. Terrorism and skilled technique cannot
by themselves put across an ideology that has no roots in mass
appeal. The fact is that Nazism was preferred by the masses
to the capitalist ideologies.

A third set of proofs is provided by the war itself, above
all by France. The masses in France could not be stirred to
enthusiasm for a war for ‘‘ democracy ” (that is, capitalism).
They rejoiced at Munich. They were passive when the war
started, and all through the war. They did not have the
will to fight. The Nazi military machine might well have
defeated France whatever the state of mind of the French
people. But the French army was not armed with bows and
arrows. It is incredible that the defeat should have been so
swift unless we admit, what is undeniably true, that the masses
in France did not want to fight the war. They did not want
to because the capitalist slogans no longer could move
them.

The United States is finding a similar difficulty. Several
years of intensive and able war propaganda fail to meet with
really enthusiastic mass response. Heads of colleges and

m

THE MANAGERIAL REVOLUTION

preachers and statesmen and librarians of Congress rebuke
the, American youth for being cynics, for its unwillingness to
sacrifice, for its indifference. But no one can scold the masses
into enthusiasm. The youth will not fight willingly because
it does not believe in what it is being asked to fight for, that
is, in the slogans of the capitalist ideologies. The point is not
whether the youth is “ justified ” or not in its feelings. These
are the feelings ; that is what is decisive.

When old ideologies wear out, new ones come in to take
their place. The capitalist ideologies are now wearing out,
along with the capitalist society of which they arc the
ideologies ; and many new ideologies are contending for the
jobs left vacant. Most of the new ideologies don’t get very
far, because they do not fulfil the requirements for great social
ideologies. The new “ agrarianism,” medievalism, regional-
ism, religious primitivism pick up a few recruits and may
have a few months of notoriety, but they remain the preoccu-
pation of small sects. At the present time, the ideologies
that can have a powerful impact, that can make real headway,
are, naturally, the managerial ideologies, since it is these that
alone correspond with the actual direction of events.

The general basis of the managerial ideologies is clear
enough from an understanding of the general character o
managerial society. In place of capitalist concepts, there are
concepts suited to the structure of managerial society and the
rule of the managers. In place of the “ individual,” the
stress turns to the “ state,” the people, the folk, the race. In
place of gold, labour and wort. In place of private enterprise,

socialism ” or “ collectivism.” In place of “ fi’eedom ” and
“ fi'ee initiative,” planning. Less talk about “ rights ” and
“ natural rights ” ; more about “ duties ” and “ order ” and
” discipline.” Less about “ opportunity ” and more about
“jobs.” In addition, in these early decades of managerial
society, more of the positive elements that were once part of
capitalist ideology in its rising youth, but have left it in old
age : destiny, the future, sacrifice, power. ... Of course,
some of the words of the capitalist ideologies are taken over :
sucli words as “ fi’eedom ” are foimd in many ideologies since

l8o

THE MANAGERIAL IDEOLOGIES

they are popular and, as we have seen, can be interpreted
in any manner whatever.

These concepts, and others like them, help break down
what remains of capitalism and clear the road for the managers
and managerial society. They prepare the psychic atmosphere
for the demolition of capitalist property rights, the
acceptance of state economy and the rule of a new kind of
state, the rejection of the ‘‘ natural rights ” of capitalism
(that is, the rights of the capitalists in the private market place),
and the approval of managerial war. When enough people begin
thinking through these instead of the capitalist categories, the
consolidation of the managerial structure of society is assured.

Starting from such concepts as these, many dialectical and
‘‘ philosophical ” variations are possible, just as there were
many variant developments of the capitalist concepts. There
will be no the managerial ideology any more than there was a
the capitalist ideology. The several managerial ideologies
will, however, revolve around a common axis, as the capitalist
ideologies revolved around a common and different axis.
Cultural background, local history, religion, the path taken
by the revolution, the ingenuity of individual propagandists
will permit a considerable diversity in the new ideologies, just
as they have in those of past societies.

We already have examples, Fascism-Nazism and Leninism-
Stalinism (communism or Bolshevism) are types of early
managepal ideologies which have been given organized
expression and have already had great success. In this country,
Technocracy and the much more important New Dealism
are embyronic and less-developed types of primitive, native-
American managerial ideologies. All of these are well known
— or, at any rate, are easily available if anyone wishes to
know about them instead of believing the parodies of them
published in the daily press — so that I do not intend to waste
time with a lengthy discussion of their contents. They arc
all managerial ideologies in one or another stage of develop-
ment, and all, with greater or less clarity, make use of the
elentents which I have listed above.

♦ ♦♦♦♦♦

i8i

THE MANAGERIAL REVOLUTION

Let US consider the position in which the managers, and
those who from ability and ambition and actual or potential
training would like to be managers, find themselves during
the last decade in capitalist nations ; and let us consider also
how they themselves see their own position in the world.
(We can easily verify our results by talking to a few managers.)
From their point of view, they are the ones who are actually
running modern society, making it work, providing its brains,
keeping it going. Nevertheless, they do not get rewards, in
terms either of unchallenged power or of percentage of the
national income, commensurate with what they feel to be their
functional role. In particular, the capitalists, even though
they may never come near a factory or a mine, get far more.

The institutional setup of capitalism — whether or not the
managers realize this explicitly — deprives the managers of
rewards in keeping with what they take to be their merits,
and at the same time prevents the managers from running
things as they would like to. They are often interfered with,
by those whose only relation to production is one of capitalist
ownership, for the sake of aims that have nothing to do with
the managers’ conception of how to run the economy. The
managers’ training as administrators of modern production
naturally tends to make them think in terms of co-ordination,
integration, efficiency, planning ; and to extend such terms
from the area of production under their immediate direction
to the economic process as a whole. When the managers
think about it, the old-line capitalists, sunning themselves in
Miami and Hawaii or dabbling in finance, appear to them
'as parasites, having no justifiable function in society, and at
the same time preventing the managers from introducing
the methods and efficiency which they would like.

The masses, also, are, through the trade union and other
devices introduced under capitalism, interfering with the
managers’ control and plans. Besides, the masses seem to the
managers stupid, incapable of running things, of real leader-
ship. The managers know that with the technological means
at their disposal it would be perfectly easy for them to put
everyone to work ; but the existing setup prevents thena from

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THE MANAGERIAL IDEOLOGIES

acting. They naturally tend to identify the welfare of mankind
as a whole with their own interests and the salvation of man-
kind with their assuming control of society. Society can be
run, they think, in more or less the same way that they know
they, when they are allowed, can run, efficiently and pro-
ductively, a mass -production factory.

It is out of such a vision of life, which is that undoubtedly
held by very many managers and would-be managers — above
all, managers functioning in the governmental apparatus —
that the managerial concepts and managerial ideologies arise.
It is not the managers themselves who make the ideologies
explicit, draw out their implications, systematize them. That
is the task of intellectuals. So long as capitalism is providing
the managers with large incomes, so long as the social structure
doesn’t seem to be cracking to pieces, the managers may
accompany these feelings I have sketched with much of the
traditional ideology of capitalism. But capitalist ideology is
hollow in their living experience. They readily adapt them-
selves to the new ideologies because ,the new ideologies
correspond much better to their experience, to their way of
looking at the world and themselves. Indeed, the intellectuals,
without usually being aware of it, elaborate the new ideologies
from the point of view of the position of the managers.

That an ideology should be a managerial ideology, it is not
necessary that managers should be its inventors or the first
to adopt it. Capitalists did not invent capitalist ideologies ;
and intellectuals were elaborating them when the ambition
of nearly every capitalist was still to be a feudal lord. It is the
social effects that count. The effects of managerial ideologies,
such as the three types I have named, are to aid in the
establishment of that structure of society which I have called
managerial, where the managers are on top. Certainly there
can be no doubt that under Nazism, Stalinism, and New
Dealism, the group in society which has done better (how-
ever well or badly) than any other group is the managers ;
above all, the managers who have had sense enough to become
integrated in the state.

m 41 m ♦

183

THE MANAGERIAL REVOLUTION

Before going further, I must pause briefly on an issue over
which there has been much controversy. I have listed
‘‘ Leninism-Stalinism,*’ but not “ Marxism,” as an example
of a managerial ideology. This raises the question of the
relation of Marxism to Leninism and of Leninism to Stalinism,
Historically, the social movement, which both in organization
and ideas traced its source to the activities and writing of
Marx, separated, through a division which started during
the last years of the nineteenth century and culminated in
1914, into two main streams : a reformist, “ social-demo-
cratic ” wing ; and a revolutionary wing in which for the
first decade after 1914 Lenin was the most conspicuous figure.
I do not any longer consider it fruitful to dispute over which
of these is “ genuine ” Marxism. Historically, they both
spring from Marx.

What happened seems to be the following : The views of
Marx, in their implications and consequences, were historic-
ally ambiguous. In addition, he proposed a social goal — a
free, classless international society — which cannot be reached
in the present period of history. Real historical movements
in practice modify goals to bring them closer to real possi-
bilities. The Marxist movement separated along the lines of
the great division of our time, capitalist society and managerial
society. Both wings of Marxism retained, as often happens,
the language bf Marx, though more and more modifying it
under new pressures. In practice, the reformist wing lined
up with the capitalists and capitalist society, and demon-
strated this in all social crises. The Leninist wing became
one of the organized movements toward, and expressed one
of the ideologies of, managerial society. The reformist wing
is a somewhat inconsistent defender of capitalism, it is true,
because by its retention of much of the ambiguous language
of Mttrx it also contributes to popularizing managerial con-
cepts. But this is the main line of the division.

Lenin died, and Stalin headed the managerial wing. The
ideology and practices were further modified. There has
been much dispute over whether Stalin is the legitimate heir
of Lenin ; and I, for some years active in the Trotskyist

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THE MANAGERIAL IDEOLOGIES

political organization, long took part in that dispute. I have
come to the conclusion, however, that the dispute has been
conducted on a pointless basis. The historical problem is not
whether Stalin or Trotsky (or someone else, for there are many
other claimants) comes closer to the verbally explicit principles
enunciated by Lenin. A dispute on such a level has never
been and will never be settled, since Lenin said many things
and did many things. It is like arguing over the legitimate
interpretation of the Bible or the Koran. So far as historical
development goes, there really cannot be much question ;
Stalinism is what Leninism developed into — and, moreover,
without any sharp break in the process of development.
Stalinism is different from Leninism, and so is a youth from
a child ; the difference is to be accounted for by the change
in the background against which development took place.
Nazism is much more different from Italian fascism than
Stalinism is from Leninism, as might be expected from the
differences in origin and conditions of development. But it
is clear enough that Nazism and fascism are closely related
as general social movements and as social ideologies.

♦ ♦ ♦ :(c iK

The most conservative capitalist spokesmen have for years
identified ‘‘ communism ’’ (that is, Stalinism), “ Nazism,*’
and ‘‘ New Dealism,” This identification has been the cause
of bitter resentment among liberals. It is certainly true that
the grounds presented by capitalists in justification of the
identification are often superficial. It is also true that what
is usually at issue in arguments of this kind are not ideologies
in general but some ’specific proposal (more relief, the Wagner
Act, government ownership of utilities . . .) about which
there is a specific difference of opinion. The broader
ideological concepts are brought in by the two sides primarily
for their emotional effect for or against the specific proposal.

Nevertheless, so far as the general ideological question is
involved, there is no doubt that the capitalists — as is ordinarily
the case — arc correct in their attitude no matter how absurd
they may be in the explicit reasons they give for the attitude.

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THE MANAGERIAL REVOLUTION

What the capitalists sense, and are in the best position to
sense, is that the final implications in all these ideologies are
anti-capitalist, destructive of the ideologies which arc the
psychological cement of capitalist society. There is, in truth,
not a formal identity, but a historical bond uniting Stalinism
(communism), Nazism (fascism), and New Dealism. Against
Offering developmental backgrounds and at different stages
of growth, they are all managerial ideologies. They all have
the same historical direction : away from capitalist society
and toward managerial society. Of the three. New Dealism
is the most primitive and least organized ; it retains most
fi'om the capitalist ideologies. But the direction is what is
all-important ; and New Dealism points in the same direction
as the others.

Once we get even a short way beneath the surface, it is
easy to recognize in both Stalinism and fascism the same
set of assumptions and key concepts — ^the concepts out of
which we have noticed that managerial ideologies develop.
The critiques of capitalist society made by communist and
fascist theoreticians are, for practical purposes, identical.
There are certain verbal and metaphysical differences, but
these are of no serious importance. The anticapitalist pages
of fascist and communist analyses could usually be inter-
changed without anyone being able to tell which came from
which. Tips holds for the critiques of capitalist economy,
politics, and ideologies*, The two ideologies are the same
also — and this is most influential in developing patterns of
attitude — ^in their scorn and contempt for “ capitalist morality,”
in their scathing dismissal of ” natural rights ” as capitalism
understands these lights.

They unite to attack “ individualism,” root and
branch. In both ideologies, the “ state,” the “ collectivity,”
“ planning,” “ co-ordination,” “ socialism,” “ discipline ”
replace the ” individual,” “ free enterprise,” ” opportunity,”
ar attitude-terms to hammer into the consciousness of the
masses.

Fascist and communist ideologies denounce in the same
words the “ chaos ” and “ anarchy ” of capitalism. They

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THE MANAGERIAL IDEOLOGIES

conceive of the organization of the state of the future, their
state, exactly along the lines on which a manager, an engineer,
organizes a factory ; that is, their conception of the state is
as a social extension generalized from managerial experience.
And they have identical conceptions of ‘‘ the party ” — their
party, with a monopoly in the political field.

The idea of the party is of special importance, for the
problem of the party is the centre of the ^rect struggle for
power. There is a most striking and thorough similarity in
both the theory and practice of communists and fascists on
the problem of the party. A communist could subscribe to
nine-tenths at least of Hitler’s careful discussion of the party
in Mein Kampf ; and the Nazis, on their side, took over many
of their ideas on the party direct from the communists. The
structure of the party, the techniques of its operation, the utili-
zation of “ sympathizers ” and periphersil ” organizations,
the building up of ‘‘ cells,” the penetration of mass organiza-
tions, the ‘‘ fraction ” method whereby a small tight party
group can control a huge mass movement, the culminating

one-party dictatorship ” within the state as a whole : all
are the same. And, in passing, the capitalist methods of
party organization do not stand a chance against them.

Both communism and fascism claim, as do all great social
ideologies, to speak for “ the people ” as a whole, for the
future of all mankind. However, it is interesting to notice
that both provide, even in their public words, for the existence
of an “ 61ite ” or vanguard.” The elite, is of course, the
managers and their political associates, the rulers of the new
society. Naturally the ideologies do not put it in this way.
As they say it, the 6lite represents, stands for, the people as
a whole and their interests. Fascism is more blunt about the
need for the ilite, for “ leadership.” Leninism worked out a
more elaborate rationalization. The masses, according to
Leninism, are unable to become sufficiently educated and
trained under capitalism to carry in their own immediate
persons the burdens of socialism. The masses are unable to
imderstand in full what their own interests are. Consequently,
the transition to socialism ” will have to be supervised by

187 K

THE MANAGERIAL REVOLUTION

an enlightened ‘‘ vanguard ’’ which understands the historic
process as a whole ” and can ably and correctly act for the
interests of the masses as a whole : like, as Lenin puts it, the
general staff of an army.

Through this notion of an elite or vanguard, these ideologies
thus serve at once the twofold need of justifying the existence
of a ruling class and at the same time providing the masses
with an attitude making easy the acceptance of its rule.
This device is similar to that used by the capitalist ideologies
when they argued that capitalists were necessary in order
to carry on business and that profits for the capitalists were
identical with prosperity for the people as a whole. So long
as the masses believed this, they were ardent defenders, not
only of capitalism in general, but even of bigger and better
times (power and privilege) for the capitalist ruling class.
The communist and fascist doctrine is a device, and an
effective one, for enlisting the support of the masses for the
interests of the new elite through an apparent identification
of those interests with the interests of the masses themselves.

The historical bond between communism and fascism is
much clearer to-day than it whs fifteen years ago. The
difference in origin obscured the similarity of direction. But
the events of these fifteen years, as they took place under
the pressures of our time, clarified the direction until the
second world war offered definitive proof. Fascism and com-
munism slough off differences one by one, approach a common
norm, and show their full historical significance. Leninism,
for example, at first denied, in words at least, the doctrine of
a one-party political monopoly. Following the development
of a one-party regime in practice in Russia (well before the
death of Lenin), Leninist theory was altered to explain why
a one-party monopoly was ‘‘ necessary : because, the argu-
ment runs, all parties but the Bolshevik party turn out
to be the counter-revolutionary. Stalinism now incorporates
the doctrine in the Soviet Constitution. Leninism formally
attacked the “ leader principle ’’ ; but in practice — not only
within the jSoviet Union, but also in communist movements.
Stalinist or non-Stalinist, outside Russia — a leader invariably

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THE MANAGERIAL IDEOLOGIES

appears. Leninism called for free and autonomous trade
unions ; but in practice the unions became incorporated in
the soviet state just as in the fascist states ; and, in other
nations, the unions become party adjuncts, before state power
is won, wherever fascist or communist parties make headway
in them (as must, indeed, follow from the technique of party
operation).

Impressive evidence of the historical bond between com-
munism and fascism is also to be found in the similar con-
clusions that are drawn from them on specific practical issues,
often at the very same time that they are most fervently
denouncing each other in words. , I wish to cite two from
the dozens of major examples :

Prior to Hitler’s assumption of power in January, 1933, on
several occasions the Communist party of Germany and the
Nazi party jointly opposed the Social-Democratic (reformist-
Marxist) candidates in the Prussian elections, and thereby
brought about the defeat of the Social-Democrats. The re-
reformist party was, as we noted, a capitalist party (in spite
of its verbal Marxist ideology). On the verge of a social
overturn the communists, in practice, found themselves drawn
to the Nazi side against the reformist : that is, the managerial
representatives held together against the capitalist.

The most important of all examples, and a crucial one,
is, however, the Stalin-Hitler pact of August, 1939, which
precipitated the second world war. How are we to interpret
this pact ? The truth is that, in spite of a few predictions
that Hitler and Stalin were going to get together, nearly
everyone in the capitalist world thought, and had thought
for years, that the main contestants in the approaching war
were going to be Germany and Russia. All serious calculations
were made with that expectation. So powerful was this
opinion that during the first six months of the war it con-
tinued unshaken : nearly everyone considered the war between
England and Germany a ‘‘ fake ” war, and waited for Russia
to change sides.” So far as the past propaganda of Nazis
and Stalinists went, the view was certainly justified. These
were the ultimate enemies. In fact, liberal journalists have

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THE MANAGERIAL REVOLUTION

since the pact spent a great deal of time rebuking Stalin and
Hitler for “ inconsistency,” for “ betraying their own
principles ” — a rather odd charge from the liberals.

If we try to understand ideologies by merely taking their
words at face value, as if they were scientific statements of fact,
we can never comprehend Wstory and politics. Nor can we
do any better by explaining great events as “ inconsistencies ”
and hypocrisies. Faced with an ultimate challenge, with the
first great opening war of managerial society. Hitler and
Stalin acted altogether correctly, from their point of view.
Hitler’s first job is to drive death wounds into capitalism —
into the “plutocratic democracies” — and to consolidate his
strategic base in the European area. The contest with Russia,
which, whether carried on by instruments of war or peace,
will be a managerial conflict in a much fuller sense than the
present war, belongs to a later stage, even though that stage
may be reached before the end of the present war. Before
getting on with the new, there must be assurance of the dis-
integration of the old. Representatives of the managerial
future come temporarily together to grapple with the capitalist
past before getting at each other’s throats.

There is no other sensible explanation of the pact.

It may be added that the conduct of the Stalinists and
Nazis in all nations during the course of the war is in general
a confirmation. They are not identical : the interests of
Germany and Russia are by no means the same in every
respect. But when it comes down to practical issues, they
equally work to weaken the war efibrts of the old-line capitalist
countries and to strengthen those of the nations closest to
managerial social organization .

New Dealism is not, let me repeat, a developed, systematized
managerial ideology. The New Dealers, most of them, protest
frequently their devotion to capitalism and “ private enter-
prise.” But just as the New Deal actions (to which we shall
return in Chapter XVI) have been toward the managerial
revolution, so is the managerial direction of the ideology of
New Dealism clear as soon as we refer it back to root concepts.
In its own more confused, less advanced way. New Dealism,

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THE MANAGERIAL IOEOLOG1E8

too, has spread abroad the stress on the state as against the
individual, planning as against private enterprise, jobs (even
if relief jobs) against opportunities, security against initiative,
“ human rights ” against “ property rights.” There can be
no doubt that the psychological effect of New Dealism has
been what the capitalists say it has been : to undermine
public confidence in capitalist ideas and rights and institutions.
Its most distinctive features help to prepare the minds of the
masses for the acceptance of the managerial social structure.

Interestingly enough, as New Dealism develops it draws
always closer to the other managerial ideologies. The notion
that there is only one party — the New Deal party — that can
represent the American people is no longer unfamiliar. The
successful propaganda for a third term was simply a native
expression of the doctrine of an indispensable leader. In each
Roosevelt election the ideological line has been sharper. It
was fascinating to observe that when Roosevelt appealed to
“ the people ” in his brilliant 1940 election speeches, he called
for the support of all classes, including “ production men,”
“ technicians in industry ” and “ managers,” with one most
notable exception : never, by any of the usual American
terms of “ business men ” or “ owners ” or “ bankers ” or
even “ industry,” did he address himself to the capitalists.
It was Willkie’s speeches that were defending “ business men ”
and “ private enterprise,” and the words and phrases correctly
expressed the social reality.

What is very revealing, moreover, is the fact that attempts
of New Dealers to utilize the old capitalist slogans are never
successful. These are the slogans of the Tories ; the Tories
have the historical right to them ; and the public in its own
way recognizes this right. The New Dealers never win any
votes when they appeal to “ free enterprise ” and “ oppor-
tunity ” and the safeguarding of property. Every heart that
can be stirred by such phrases was swept into Willkie’s “ Great
Crusade ” (no one seemed to remember that the original
Crusades were also lost). The New Deal mass support de-
pends upon, is aroused and held, through the New Dealers’
use of the managerial ideas and slogans.

*91

I HI. MANAGERIAL REVOLUTION

Technocracy is another example of an American variant
of the managerial ideologies. Technocracy has not had a
very wide direct public influence, but much has been taken
over from it both by New Dealism and also by communism
and fascism. As a matter of fact, Technocracy’s failure to
gain a wide response can be attributed in part to the too-
plain and open way in which it expresses the perspective of
managerial society, In spite of its failure to distinguish
between engineers and managers (not all engineers are
managers — many are mere hired hands — and not all managers
are engineers), yet the society about which the Technocrats
write is quite obviously managerial society, and within it
their “ Technocrats ” are quite obviously the managerial
ruling class. The theory is not dressed up enough for major
ideological purposes. It fails also in refusing to devote
sufficient attention to the problem of power, which so promi-
nently occupies communism and fascism. However, the
developed native-American managerial ideologies of the future
will doubtless incorporate Technocratic propaganda, for it
seems on the whole well adapted to propaganda needs in this
country.

But what about the bitter disputes among the various types
of what I have stated are all managerial ideologies ? How
can these be explained if the ideologies are all ‘‘ the same ” ?
Are the disputes, thought so notorious, “ unreal ” ? I wish
to guard against possible misunderstanding. These disputes
are not unreal ” and the ideologies are not “ the same.”
Such a contention would be ridiculous and easily disproved.
What I am maintaining is simply this : Communism (Lenin-
ism-Stalinism), fascism-Nazism, and to a more-partial and
less-developed extent, New Dealism and Technocracy, are all
managerial ideologies. That is, in short : as ideologies they
contribute through their propagation to the development of
attitudes and patterns of response which are adverse to the
continuance of capitalism and favourable to the development
of managerial society, which are adverse to the continued
social acceptance of the rule of the capitalists, and favourable
to the social acceptance of the rule of the managers. The

192

THE MANAGERIAL IDEOLOGIES

fact is, moreover, that they and ideologies similar to them are
securing wide public acceptance throughout the world while
capitalist ideologies are losing support ; and that this support
is much more intense than that given to the capitalist ideologies,
making believers willing to sacrifice and die for managerial
slogans while fewer and fewer are willing to sacrifice and die
for capitalist slogans. This shift in public attitude is itself a
very important symptom of the general breakup of capitalist
society and the advance of managerial society.

There are, however, great, and by no means illusory,
differences among these managerial ideologies. A number
of these differences will be discussed in the course of the
next three chapters. The differences have various sources :
the special local circumstances under which the managerial
transition takes place (Russia is not Germany nor either the
United States) ; the way in which the transition takes place
(the stages in the Russian and German way have been not
all alike : there are several roads to the managerial goal) ;
the oppositions, present and to come, among the various
sections of the new ruling class ; differing cultural tradition
and psychological equipment which lead the formulators of
the ideologies to express themselves differently.

If we were making a logical or etymological analysis, we
might well stress the differences among the ideologies rather
than the similarity. But there is nothing strange in the
differences, or even in their causing disputants to kill each
other over them. In the Middle Ages there were immense
differences between realists and nominalists, between Augus-
tinians and Scholastics ; the disputes were not by any means
confined to words. It would be a crude error to discount
these differences as unreal,’’ and for many purposes they
arc what is most important. Yet medieval realism and early
nominalism, Augustinianism and Scholasticism, were from a
sociological point of view all variant types of feudal ideologies ;
they all started fi:om shared concepts ; they all contributed
to the formation of attitudes favourable to the maintenance
of the feudal system and the rule of the feudal lords. The
differences among Calvinism, Lutheranism, Presbyterianism,

193

THE MANAGERIAL REVOLUTION

Anabaptism, Episcopaliaiiism, Quakerism . . . were not trivial
in the sixteenth and seventeenth centuries and on many
occasions led from philosophical debate to bloodshed. But
these were all, at least as against medieval Catholicism,
capitalist religious ideologies, all contributing in variant ways
to the development of attitudes favourable to capitalist society
as against feudal society. How many bitter disputes over
** natural rights ’’ have occurred in the modern world, without
nevertheless questioning a natural-rights foundation that
assumed a capitalist social order ! The analysis which I
make here is what is appropriate to the central problem of
this book ; it would be irrelevant, and distorting if transferred
to the context of another kind of problem.

The development of managerial ideologies has not come to
an end, needless to say, with contemporary Stalinism and
Nazism, any more than capitalist ideologies froze in the
sixteenth century. As New Dealism is primitive alongside
them, they will seem primitive to the ideologists of the future.
There are indefinite possibilities for philosophical elaboration,
and there will be plenty of intellectuals anxious for the task.
Managerial ideologies will have their Cartesian and Rous-
seauistic and Kantian “ revolutions.” But the main direction
can be known now, is to be seen now in what is already at
hand.

194

XIV

THE RUSSIAN WAY

TThere has been an immense stack of books written
about contemporary Russia and Germany, but few of these
have served to clarify their subject-matter. The reason is
evident : people are not interested in understanding Russia
and Germany, but in expressing their feelings about them.
Passionate loyalty or equally passionate hatred seem to be
the only two feelings that men to-day can have toward these
two nations. In fact, no ether nations have been able to
excite half so extreme a loyalty or so bitter a hatred as these
two. This singularity ought itself to suggest that within these
nations is to be discovered the historical key of these last
years.

Passionate feeling, unfortunately, however appropriate it
may be for some purposes — winning or losing a war, for
instance — is a poor foundation for understanding. A scientist
may hate the plague which he is studying ; but he must not
permit that hatred to juggle the results he gets in his laboratoiy.
The subject of this book is knowledge, not passion. We are
trying to find out what is happening, in Russia and Germany
as elsewhere, not what to feel about it or what to do about it.

Once, we look carefully and impersonally, it is not hard to
find out. True enough, almost all the news that comes out
of Russia and Germany is formulated in accordance with the
propagandistic aims of the regimes. The statistics cannot
be trusted, and statistics in many fields are not given out at.
all. But a physician does not have to know the chemical
condition of every cell in his patient’s body in order to
diagnose smallpox. We can find out enough about Russia
atid Germany for our purpose, and that is all that can be

195

THE MANAGERIAL REVOLUTION

required. If our purpose were different — if we wanted to
predict exact price movements over the next six months in
Germany and Russia or to estimate exactly how much butter
or petroleum were on hand — there is not enough information
available to fulfil such purposes. But we are interested in
the problem of what is happening to society, in discovering
what social structure, in terms of major economic and political
institutions and major ideologies, is going to prevail in the
comparatively near future and for the next period of history.
We have at our disposal, if we want to use it, enough informa-
tion about Russia and Germany to relate developments in
those nations to our problem.

The theory of the managerial revolution does not hold that
in the present historical period there will be no mass revolu-
tions, or no mass revolutions carried through under the
slogans and ideas of socialism. On the contrary. There have
already been several mass revolutions, some under socialist
slogans, in the period of rapid transition which began in 1914.
Others are doubtless to be expected. A social revolution does
not necessarily have to be accompanied by overt mass revolu-
tionary movements, but it often, and perhaps usually, is.
The primary question for us, however, is not the mass revolu-
tionary movements, and above all not the slogans under which
these develop, but rather the consequences of these movements
in terms of social structure.

The consequences of a mass revolution seldom coincide with
the slogans and ideas under which it takes place. Capitalism
was introduced or strengthened in many places in the world
to the accompaniment of mass revolutions. I have never
read or heard of such a revolution proclaiming in its slogans
that its object was to introduce capitalism. There was, it
is true, a certain relation between the slogans and what
happened ; they were, as we saw in the last chapter, slogans
which tended to develop attitudes favourable to capitalist
institutions and capitalist rule ; but the relation in indirect.
Similarly, an ostensibly socialist mass revolution does not at

196

THE RUSSIAN WAY

all have to lead to socialism. These preliminary remarks are
indispensable to clarity about what has happened in Russia.

We saw that the managers, and the future managerial
society, are faced with a triple problem : (i) To reduce the
capitalists (both at home and finally throughout the world)
to impotence ; (2) to curb the masses in such a way as to
lead them to accept managerial rule and to eliminate any
threat of a classless society ; (3) to compete among them-
selves for first prizes in the world as a whole. To solve the
first two parts of this problem (the third part is never wholly
solved) means the destruction of the major institutions and
ideologies of capitalist society and the substitution for them
of the major institutions and ideologies of managerial society
along the lines that we have already surveyed. To accomplish
this solution, large sections of the masses must be enlisted,
under suitable slogans, on the side of the managers and of
the managerial future. Like the capitalists, the managers
do not as individuals do the bulk of the fighting which is
part of the process of social transition. This they leave to
the masses. Even the fighting which, in addition to the
change in ideology, is needed to curb the masses is done by
one section of the masses in combat against other sections.

To the extent that the first two parts of the triple problem
are solved, managerial society has replaced capitalist society.
Their solution, by whatever means, is the managerial revolu-
tion. The structure of managerial society is not, however,
firmly consolidated until it is dominant in the world as a
whole : that is, in the three central ” areas of advanced
industry which we noticed in Chapter XII.

These three parts into which I have analyzed the managerial
problem do not coincide with any particular order in time.
The solution can be achieved in differently arranged stages.
All three parts are ordinarily mixed together, in varying
degrees, at every stage. War, especially world war, throws
them almost inextricably together and vastly speeds up the
whole process.

One pattern of development is illustrated in surprisingly
schematic fashion by the events in Russia since 1917. What

^97

THE MANAGERIAL REVOLUTION

has happened in Russia is the following : The first part of
the triple problem was solved quickly and drastically. The
capitalists were not merely reduced to impotence, but, most
of them, physically eliminated either by being killed or
emigrating. TTiey were not replaced by other capitalists —
if we discount a socially unimportant continuation of small-
scale capitalists, especially during the so-called NEP (New
Economic Policy) period. The capitalists were got rid of
not merely as individuals, but as a class, which is the same
thing as to say that the chief economic institutions of capitalism
were done away with, that the economic structure of society
was changed.

In another sense, it is true, this drastic solution of the first
part of the problem was only partial. It was the home
capitalists, not all capitalists, who were eliminated, whereas
a full solution for the managers anywhere requires a reduction
to impotence of capitalists and capitalist institutions every-
where — or at least in all major areas. This the Russians soon
discovered (their leaders knew it in advance) when the great
capitalist nations, including the United States, dispatched
armies to Russia in order to try to overthrow the new regime.
But the regime defended itself with considerable success and
reached an imeasy truce with foreign capitaUsts which lasted
until the second world war.

The second part of the managerial problem — the curbing
of the masses — ^was left suspended until this solution, or partial
solution, of the first part was achieved. Or, rather, the
masses were used to accomplish the solution of the first part
just as the capitalists in their early days used the masses to
break the power of the feudal lords. In a new stage, the
beginning of which merged with the first, the solution of the
second part of the problem was carried through. The masses
were curbed. Their obscurely felt aspirations toward equali-
tarianism and a classless society were diverted into the new
structure of class rule, and organized in terms of the ideologies
and the institutions of the new social order.

The third part of the managerial problem — the competition
with other sections of the managers — still lies primarily in the

198

THE RUSSIAN WAY

future. The preparations for meeting it, always implicit in
the activities of the sections of the Communist International
(which are in effect agencies of the Russian rulers) throughout
the world, are being greatly speeded up during the course
of the war. Russia, the first managerial state, prepares to
defend its rights of seniority in the managerial wars of the
future.

The Russian way, the Russian pattern, may thus be summed
up as follows : (i) Speedy reduction of the capitalist class at
home to impotence (and, after a sharp struggle, an armed
temporary truce with capitalists elsewhere) ; (2) the curbing
of the masses in a more gradual and piecemeal manner, over
a considerable number of years ; (3) direct competition, in
the days still to come (though the preparations started some
while ago), with the other sections of the rising managerial
world society.

This pattern, and relative timing, is, it may be remarked,
not necessarily confined to Russia. It may well be repro-
duced elsewhere, especially if conditions comparable to those
of 1917 in Russia are repeated. Among the factors that
prominently determined it in Russia may be mentioned : a
relatively weak development of capitalism internally, with a
correspondingly weak and small capitalist class ; the associa-
tion of the capitalist class with the discredited and also weak
political regime of Czarism ; and the devastating social,
economic, and human crisis brought about in Russia by the
first. world war.

The rise of Stalin from his obscurity of the first years of
the revolution corresponds roughly with the carrying out
of the second part of the managerial problem : the curbing
of the masses and the consolidation of the rule of the new
group. As so often happens in history, the new stage in
development was marked by the discarding of the leaders of
the preceding stage and the assumption of key positions by
formerly subordinate or even altogether unknown men.
Those who had carried the burden of the first stage, the
reduction of the capitalists, were first stripped of ^ective
power in the faction struggles of 1923-29 ; and then, in the

^99

THE MANAGERIAL REVOLUTION

more recent trials and purges, for the most part killed. The
great public trials gave, we might say, a formal flourish to
the solution of the second part of the problem, which left
the masses properly subordinated in the new social structure,
and the power, privileges, and greatest share of the revenues
in the hands of the new rulers — the managers and their
associated bureaucrats. In a sense, the mass purges were
largely symbolic and ideological in purpose. The purgees
had already been broken, and were most of them personally
prepared, through one or another rationalization, to go along
with the new order.

We must not make the mistake of supposing that the Russian
changes were dependent merely on the presence of one or
another individual, on the personal wickedness or nobility
(depending on our point of view) of, for example, Stalin.
If Lenin himself had lived, there is no reason to think that
the process would have differed greatly. After all, there is
more than passing significance in the fact that, for many
years, probably the most intimate colleague of Lenin's, the
man with whom he exercised hidden control over the Bol-
shevik party underneath the party's formal apparatus, was
the brilliant and successful engineer — the manager — Krassin.
But the death of all the early leaders was an important ritual
act in establishing the mass attitudes of managerial society
and in strengthening the foundations of the managerial
institutions.

The pattern of the Russian way to the managerial revolu-
tion is illuminated by the history of the revolutionary concept
of “ workers’ control.” ‘‘ Workers' control of industry ” has
from the beginning been a slogan of the Leninist wing of
Marxism. The reason why is easy to understand. According
to the formal ideology of socialism, private ownership (control)
in industry is to be eliminated — that is, as socialism under-
stands it, control is to be vested in the masses as a whole.
The crucial revolutionary act, therefore, would presumably
be the actual taking over of control in industry by the workers
themselves. Hence the slogan.

Now, in the course of the Russian revolution (as in the

S500

THE RUSSIAN WAY

many other attempts at mass revolution which followed it
during the past twenty-three years), the workers acted quite
literally in accordance with the slogan of “ workers’ control.”
In the factories, shops, mines, and so on, the workers, through
committees elected from their own ranks, simply did take
over control. They ousted not only the owners (who were
seldom there to be ousted, since owners arc not usually con-
nected directly with production nowadays) but all the directing
staff and supervisors : that is, they ousted also the managers.
The workers thought, in their own way, that the revolution
was designed to rid them of all rulers and exploiters. They
recognized that the managers as well as the owners were
among the rulers and exploiters both of the past and, above
all, of the future. The workers set about running the factories
themselves.

This state of affairs did not, however, last long. Two
issues were at stake. In the first place, the separate factories
and other instruments of production were not run very well
under workers’ control exercised at the source ; and there
were even greater difficulties in the co-ordination of the efforts
of various factories. It is needless to speculate on exactly
why this was so. Elected committees of the workers them-
selves, the members of which are subject to momentary recall
and who have, besides, no technical training for, or back-
ground in, the managerial tasks, do not seem to make a good
job of running modern factories or mines or railroads. It is
even harder for them to collaborate effectively in directing
entire branches of industry or industry as a whole. Perhaps
new democratic mechanisms and sufficient time to gain ex-
perience would overcome the troubles. As things actually work
out, time is not granted, and the mechanisms are not available.

Second, the perspective of workers’ control of production
at the source, if it should be proved in the end successful,
would mean the elimination of all privilege, all differentials
of power in society, would mean, in short, a classless organi-
zation of society. Thus the drive for class power in society
needs to get rid of workers’ control, and finds rational motiva-
tion in the evidences of the inefficiency of workers’ control —

SOI

THE MANAGERIAL REVOLUTION

above all, because the movement toward workers* control
occurs in periods of intense social crisis, or war and civil
war, when efficient industrial organization seems an imperious
need.

If the temporary workers* control is replaced by the old
control of capitalist owners (as happened in the two revolu-
tionary crises in Germany at the end of, and a few years
after, the first world war), then society, after a crisis, has
simply returned to its previous capitalist structure. If wprkers*
control is replaced by the de facto control of the managers,
backed by a new kind of state, then capitalism, after a
transitional crisis, has changed into managerial society. The
latter, through a series of intermediary steps, is what happened
in Russia.

For a while after the revolution in Russia, in many factories
and other enterprises — ^for a very short while — the factories
were run by the workers through their elected committees,
called Factory Committees.’* Then the “ technical **
direction of operations was turned over to specialists ’*
(that is, managers), with the Factory Committees remaining
in existence and still exercising substantial control through
a veto power over the managers and jurisdiction over “ labour
conditions.** Meanwhile, bureaus and commissions and indi-
viduals appointed from above by the new (soviet) government
were beginning to take over the job of co-ordinating the
efforts of various factories and branches of industry. Gradu-
ally the powers of the managers and managerial co-ordinators
increased, necessarily at the expense of “ workers* control **
and the Factory Committees. The Factory Committee lost
their veto powers. Their prerogative, ‘‘ labour conditions,**
became more and more narrowly interpreted. The Com-
mittee composition was changed to include one state repre-
sentative, one managerial representative, and one man
nominally representing the workers. Finally, even these
Committees lost all their real power and remained as mere
formalities, to be dropped altogether in 1938.

Workers* control had been transformed into managerial
control.

RO«

THE RUSSIAN WAY

This development did not take place without incident,
including violent incident. The workers, or some of them,
sensed its meaning : that the freedom and end of privilege,
which they had thought the revolution was to bring, were
giving way to a new form of class rule. They tried to prevent
power from getting out of the hands of their Committees.
They refused to accept the managers, sometimes drove them
out or even killed them. But at each decisive step, the state
(the “workers’ socialist state”), whether under Lenin or
Stalin, backed not the workers but the managers. A wide
campaign of “ education ” was undertaken to show the
people why “ workers’ rule ” meant, in practice, managers’
rule. Where necessary, the education by the word was
supplemented with education by firing squad or concentration
camp or forced labour battalion.

Lenin and Trotsky, both, in the early years of the revolu-
lion, wrote pamphlets and speeches arguing the case of the
specialists, the technicians, the managers. Lenin, in his
forceful way, used to declare that the manager had to be a
dictator in the factory, “ Workers’ democracy ” in the state,
Lenin said in effect, was to be founded upon a managerial
dictatorship in the factory.

Perhaps Lenin did not realize the full irony of his position.
He, as a Marxist, believed — correctly — that the roots of social
power lie in the control over the instruments of production.
And he, as the head of the new state, helped to smash workers’,
popular, control over those instruments and to substitute for
it control by the managers. And, of course, the managers of
individual plants became subordinate to the big managers,
to the boards and bureaus directing entire sectors of industry
and governing industry as a whole. Inteje^stingly enough,
these managers under the new state included many of those
who had been managers under the old capitalist rule. Lenin
and Trotsky poured scorn on “ infantile leftists ” who were
against making use of the “ services ” of the “ bourgeois
specialists ” (as they called them). The workers needed them
— ^to run the plants. Lenin regretted that there were so few
left and that in Russia there had never been an adequate

20 $

O

THE MANAGERIAL REVOLUTION

%

staflF of trained specialists. Most lavourable terms were given
to foreign bourgeois specialists ” who were willing to come
to work under the new regime. The class of managers that
steadily rose was not altogether a new creation ; it was the
development and extension of the class which, as we have
seen, already exists, and is already extending its power and
influence, under capitalism, especially during the latter days
of capitalism.

We shall deservedly place the greatest stress upon what
happened to “ workers’ control.” Moreover, the Russian
experience is plainly typical. There have not yet been any
other revolutions just like Russia’s ; but there have been a
dozen revolutionary situations of the same general nature.
In them all, the same tendencies are displayed. In them
all — Germany, the Balkans, China, Italy, Spain — the workers,
in the crisis, start to take over control of the instruments of
production, to take it over directly, into their own hands on
the spot. Always a formula is found to explain to them
why this cannot continue ; and, if the formula is not enough,
the guns come later.

The question for us is not whether it is a “ good idea ” for
the workers to take control. We are concerned merely with
noticing, first, that they try to take control ; and, second,
that they do not succeed in maintaining control. Their
inability to maintain control is one more demonstration that
socialism — a free, classless society — ^is not now scheduled.
The control, and the social rule which goes with it, when it
leaves the hands of the capitalists, goes not to the workers,
the people, but to the managers, the new ruling class. A
parallel of the Russian process can be observed with particular
clarity in connection with the events in Loyalist territories
during the recent Spanish Civil War, above all in Catalonia.
There, just as in Russia, the workers and peasants began
taking over direct control of the factories and railroads and
farms. There too, not at once, but during the course of the
first two years of the Civil War, the de facto power slipped
from the workers’ hands, sometimes voluntarily given up at
the persuasion of a political party, sometimes smashed by

204

THE RUSSIAN WAY

arms and prison. It was not the troops of Franco who took
control away from the people of Catalonia ; they had lost
control well before Franco’s army conquered.

These experiences have, as a matter of fact, received recog-
nition in Leninist doctrine (both the Stalinist and Trotskyist
variants), not so much in public writings as in the theories
elaborated primarily for party members. “ Workers’ control,”
the doctrine now reads, is a “ transition slogan,” but loses its
relevance once the revolution is successful and the new state
established. By calling it a “ transition slogan ” it is meant
that the slogan, and the act, of establishing workers’ control
are useful in arousing mass sentiment against the existing
capitalist regime and in bringing about the downfall of the
capitalist order — both undoubtedly the case ; but that, when
the new regime is functioning, workers’ control must, naturally,
step aside.

The ideological explanation offered by Leninism for this
turn-about is that, while workers must rightly defend them-
selves with the help of workers’ control against the enemy
capitalist state, they will have no need to defend themselves
against the new regime which will be ‘‘ their own ” state, a
workers’ state busily constructing a true socialist society.
This explanation is to be interpreted in the same manner
we interpret all aspects of all ideologies. What is really
involved is a very important consequence of the pattern of
the Russian way to managerial society, which we are here
studying. This pattern, we saw, calls for first reducing the
capitalists to impotence and then curbing the masses. The
masses are of course used in accomplishing the first step
and workers’ control ” is a major manoeuvre in breaking
the power of the capitalists. But workers’ control is not
only intolerable for the capitalist state : it is, if long con-
tinued and established, intolerable for any state and any
class rule in society. Consequently, the consolidation of
managerial power in the new state requires the breaking
down of workers’ control, which was so important an influence
in finishing up the old society. Leninist doctrine expresses
in terms of a managerial ideology the lessons of the Russian

205

THE MANAGERIAL REVOLUTION

and similar experiences from the point of view of the interests
of the managers.

♦ ♦ ♦ ♦ ♦

Russia has without doubt been the chief political enigma
of the past generation ; and on no other enigma have so
many attempts at explanation been spent. Everyone has
been wrong in predicting what was going to happen to
Russia. What kind of society is it ? What sort of revolution
was the Russian Revolution ? What is it leading toward ?
These questions have remained mysteries. That the revolu-
tion was made under the leadership of radical Marxists who
professed as their aim the establishment of the free, classless,
international society of socialism, everyone knows. And
everyone knows also that there is not the trace of a free and
classless society or of internationalisation in Russia to-day.
Finally, in spite of the reiterated predictions, from friends and
enemies, of its quick downfall, the regime has endured,
without a break, for more than twenty- three years.

The mysteries and puzzles that are found in connection
with Russia, the failure of predictions about her future
course, can be accounted for in just the same way that similar
mysteries and puzzles and failures are accounted for in other
fields : by the fact that the phenomenon of Russia is treated
from the point of view of false theories. The false conclusions
drawn, the bewilderment, show us that the theories from
which they proceed are wrong. Commentators, in despera-
tion, fall back on the morbid Russian soul ’’ to excuse their
inability to understand events. Disappointed friends of
Russia keep complaining that the Russian government is

inconsistent with its principles,*’ that it has betrayed ”
socialism and Marxism — in short, that it has failed to do
what these disappointed friends had hoped and expected
it would do. How much simpler (and science always prefers
the simpler answer if it is to be found), after all these years
of historically continuous development, to substitute for these
strained and paradoxical apologies a theory which shows
that Russia» far from being inconsistent with its prindples,

206

THE RUSSIAN WAY

acts uniformly in accordance with them, that Russia could
never have betrayed socialism because its revolution never
had anything to do with socialism !

Russia was and still remains a mystery because the theories
that tried to understand it were false. These theories all
revolved around one or the other of the two predictions which
we discussed and rejected earlier in this book : the prediction
that capitalism is going to continue ; or the prediction that
capitalist society is about to be replaced by socialist society.
Both of these predictions share the assumption which I analyzed
in Chapter IV : that “ the only alternative ” to capitalism
is socialism — that capitalism and socialism are the only two
possible forms of social organization in our time. On the
basis of this assumption and either of these predictions, Russia
had to be judged socialist if it were not to be regarded as
capitalist. No matter what happened to Russia, it had to
be thought still socialist unless one were willing to accept
the view — as some have in recent years — that it had reverted
to capitalism.

The Russian Revolution was regarded by almost everyone,
when it happened, as a socialist revolution. Almost everyone,
also, agreed at the beginning that it would thereafter have
to develop either toward socialism (a free, classless, inter-
national society), or return to capitalism. On the basis of
the common assumption, and of either of the two predictions,
this expectation, shared alike by friends and enemies of the
revolution, inside and outside Russia itself, was certainly
justified. But ruither development has in fact occurred. After
twenty-three years it is time to recognize that this failure
proves the common assumption, and both predictions, to be
false. It is false that soci^sm is “ the only alternative ” to
capitalism. It is false that capitalism will continue. It is
false that socialism will replace it.

Russia has not reverted to a capitalist social structure.
None of the major distinguishing features of capitalist society
is to be found within Russia. The non-capitalist elements of
Russian life have been enormously increased and strengthened,
not weakened, with the years. Everyone said that the growth

ao;

THE MANAGERIAL REVOLUTION

of privilege in the new Russia would “ inevitably ” bring
about the re-introduction of capitalism. Privilege has grown,
but capitalism has not come back. There are no capitalists
of any importance in Russia. Not even imperialist expansion
beyond the national borders brings any tendency to return
to capitalism ; just the contrary.

And at the same time there has been not the slightest
tendency toward the free, classless society of socialism as
socialism was defined in the prior expectations. There is no
democracy in Russia. There is no control, social or economic
or political, exercised by the masses. There is a stratification
in power and privilege which exceeds in degree that to be
found in many capitalist nations. There is in Russia, as we
have seen, systematic class exploitation on the basis of the
state-owned economy. Russia came by far its closest to
socialism in the months immediately following the revolution.
In every decisive respect, every year since then has found it
further away, not nearer socialism as defined by their fathers.

It is the business of a correct theory to clear up
mysteries. If once we get away from ungrounded assump-
tions, unjustified predictions, if we stop mistaking ideologies
for scientific hypotheses and recognize them for the expressions
of social interest that they are, then we can get rid of
bewilderment over Russia. Russia is not a mystery from the
point of view of the theory of the managerial revolution.
The Russian development, in broad outline, is exactly what
may be expected from that theory amd is a powerful con-
firmation of the theory.

The Russian Revolution was not a socialist revolution —
which, from all the evidence, cannot take place in our time
— but a managerial revolution. It was not the only possible
kind of managerial revolution, but it was one kind, the kind
the pattern of which this chapter has explained. The sharp
revolutionary crisis has been succeeded by the consolidation
of the new class regime in a manner altogether antdogous
to a number of the capitalist revolutions. The outcome of
the revolution is the development of a new structure of society
— ^managerial society, a new order of power and privilege

208

THE RUSSIAN WAY

which is not capitalist and not socialist but that structure
and order which this book has described. Leninism-
Stalinism Bolshevism is not a scientific hypothesis but
a great social ideology rationalizing the social interests
of the new rulers and making them acceptable to the minds
of the masses. There is nothing inconsistent between this
ideology on the one side and the purges, tyrannies, privileges,
aggressions on the other : the task of the ideology is precisely
to give fitting expression to the regime of those purges,
tyrannies, privileges, and aggressions.

To-day Russia is the nation which has, in structural
aspects, advanced furthest along the managerial ro^d. In
its economic and political institutions, Russia comes closest
to the institutional types of the future. It should not, how-
ever, be thought that Russia is now an example of a finished
and fully consolidated managerial state. Managerial society
is still hardly out of the womb. The present situation in
Russia, moreover, is conditioned by the backward cultural
and economic inheritance of the Russian Revolution and by
the fact that its political regime is suited to a period of social
transition and sharp recurrent crises. But, structurally at
any rate, the institutions of present-day Russia, more fully
than any others in the world, give the direction toward the
future. It is along such lines that the institutions of established
and consolidated managerial society will evolve.

Who arc the rulers of Russia ? They are, of course, the
men who are running its factories and mines and railroads,
the directing members of the commissariats and subcom-
missariats of heavy and light industry and transportation and
communication, the heads of the large collective farms, the
expert manipulators of the propaganda mediums, the chiefs
of the dozens of mass organizations,’’ the managers in
short : these and their bureaucratic and military and police
associates. The power and privilege are under their control.
For them the capitalists at home have been got rid of or
reduced to impotence ; and for them the capitalists abroad
were fought off and forced to an uneasy truce. It is they
who have curbed the masses and have instituted a social

209

THE MANAGERIAL REVOLUTION

Structure in which they are on top, not by virtue of private
property rights in the instruments of production, but through
their monopoly control of a state power which has fused with
the economy. It is they who now await the contests of the
future with the other sectors of the world managers.

It is these managers, with their political and military
associates, who have been extending their regime beyond
Soviet boundaries during the course of the second world war.
The events in the little border nations have reproduced on
a laboratory, and somewhat grotesque, scale the pattern of
the Russian Revolution ; and, also like a laboratory experi-
ment, the events have done so under the firm guidance of
the experimenter, not at their own sweet will. The local
workers and peasants (in the Baltic nations, eastern Poland,
Bessarabia), as the Red Army marches, begin to take control
of the local industries and farms and to oust the capitalists
who have not already fled. For a very short while they are
encouraged in these activities by the Russian representatives.
A semblance of ‘‘ workers’ control ” appears. The first part
of the triple managerial problem is solved — the capitalists
are reduced to impotence — which is not so major a task in
the tiny states concerned. Then, with hardly a breathing
space, the solution for the second part of the managerial
problem takes place undet much simpler conditions than in
Russia in her own time. The masses arc curbed : to-day
the army and the GPU that supervise the curbing are large
and experienced in solving this part of the problem. The
new rulers — not new capitalists, naturally, but Russian
managers and their representatives — walk in to run their
newly acquired factories and mines and banks. Workers’
control is transformed into a name, and the soldiers and
police batck the dictates of the managers. The whole process,
which took in Russia itself so many strenuous years, is
completed in a couple of months.

What will happen to Russia in the days to come?

There is no doubt that the revolutionary Russian regime
has shown astounding strength surpassing all estimates.
Disaster has been a hundred times prophesied, but the

aio

THE RUSSIAN WAY

regime still stands. It came into existence in the nation
*which had suffered most, and immeasurably, from the first
world war. It fought off the armies of intervention sent by
the greatest powers ; and it held its own against their always-
continuing intrigues and hostility. It won out in a civil war
that lasted years, during which for a while its authority was
reduced to a small province of the vast Russian territories.
It did not fall in the midst of famines that wiped out millions
of persons, and many and devastating plagues. It was able
to exile, imprison, or shoot millions of its own citizens,
including the majority of the officers of its armed forces,
without being seriously challenged by internal revolt. There
is in history scarcely a record of another regime that has
been able to go through such events unscathed. That the
Russian regime has done so can only be understood as a
demonstration of the strength of the managerial organization
of society — of its strength as against the capitalist organiza-
tion, for the Russian regime has not been tested yet against
other managerial states. Moreover, Russia has mighty
potential resources in raw materials, land, and people.

The possible overthrow of the Russian regime has, in
keeping with the assumption which we have examined,
always been thought of as meaning the restoration of
capitalism, either through conquest by foreign capitalist
nations or by internal ‘‘ counter-revolution.’’ By now the
evidence is fairly conclusive that there is not going to be a
capitalist restoration in Russia. Internally the tendencies to
capitalist restoration, so often expected, have failed to appear
on a serious scale and have been weakened steadily with
the years. There is no reason to look for them in the future,
above all when we realize that capitalism on a world scale
is just about finished. Externally, there were certainly
threats in great number ; and some of these might once have
led to the conquest of Russia by capitalist powers. But
when Britain and France failed to attack Russia during the
Finnish war, this marked the close of the period during
which foreign capitalist nations might have hoped to restore
Russia to capitalism by armed might.

ail

THE MANAGERIAL REVOLUTION

However, the question of foreign intervention cannot be
ruled out. The capitalist nations have shown by their
actions that they have no confidence in their ability to carry
through war against Russia. But world society is now in the
process of being transformed along managerial lines. The
advantages which the managerial structure gave Russia
against capitalist nations disappear when Russia is con-
fronted with other managerial or near-managerial states
which are not burdened by Russia’s weaknesses. There
seems good reason to believe, as I stated in Chapter XII,
that during the course of the next years Russia will
split apart into an eastern and western section, each
section gravitating toward one of the key areas which
constitute the strategic bases of the super-states of the
future.

Indeed, this process has already started. Siberia is so far
away from Moscow and so badly connected with European
Russia that it naturally swings toward the East as it has for
some years been conspicuously doing. Its future brings it
into always-closer integration with the East Asian central
area of advanced industry. And similarly, at an increased
rate since the Nazi-Soviet pact, European Russia swings
toward the central European area. Feelers move out from
both sides of the border. The Russian boundaries advance
toward the west. At the same time, economic and social
relations with Germany increase. German technicians,
managers, move into the Russian industrial enterprises.
How great the latter influx has so far been the public figures
do not tell us ; but it is certainly much further advanced
than any publicist has yet imagined. Thi^ infiltration of
German managers is a large step in the road toward fusion
of European Russia with the European centre. We may
be sure that the completion of the fusion, under whatever
nominal auspices it comes, wiU find Russia subordinated to
European centre, not, as the spinners of Bolshevik night-*
mares tell us, the other way around. The development of
the fusion begins in a dozen ways, beneath the surface. Its
accomplishment will, presumably, include war, one or more

21 ^

THE RUSSIAN WAY

of the managerial wars of to-morrow, the preparations for
which are so plainly around us.

Mote , — In spite of the Russo-German war, it has seemed to
me advisable to leave the text as it was written in 1940, and
first published in the Spring of 1941. The intent of this book
is not journalistic but scientific. From a scientific stand-
point, the theory of the managerial revolution is much better
tested by its ability to make events intelligible before they
happen, rather than by the ease with which it can doctor up
references to what has already occurred.

The outbreak of the Russo-German war, and its course,
seem to me a confirmation of the fundamental analysis pre-
sented in this chapter, and in particular of the political
analysis summarized in Chapter XII. This war, to use the
language of the theory, is part of the means whereby the
western half of Russia is being “ integrated into the European
super-state.” However, the impression that the text gives is
of a later beginning of war between Russia and Germany
than actually turned out to be the case — and, so far as I can
recall, this impression corresponds with the opinion I held in
1940. I believe that this error in ‘‘ time schedule ” resulted
from a too schematic application of the sociological and
economic analysis to the problem, with insufficient attention
to strictly military considerations. That a large part of
Russia should be drawn within the west-European orbit, and
that war would be part of the process of fusion, followed
from the whole course of contemporary history. Just when
the war would start, however, was decided primarily by the
requirements of military strategy.

«iS

XV

THE GERMAN WAY

W HEN WE HAVE FINISHED EXPRESSING OUR EMOTIONS
about Germany by calling its society “ nihilism ” or
“ barbarism ” or whatever similar epithet we prefer, we are
still left with the scientific problem of describing just what
kind of society it is and where it is going. It is obvious,
when we think about it, that no organized society — and Nazi
Germany is certainly a form of organized society — can actually
be nihilistic ; and barbarian,’’ by etymology and
ordinary usage, means simply “ foreign,” different from
ourselves.

The serious attempts to analyze contemporary German
society reduce to two. The majority view has been that
Nazism is a type of capitalism, usually considered decadent
capitalism, the degenerate last stage of capitalist society.
A small but recently growing number of critics hold that
Nazism is an early stage in a new form of society. This
latter group, however, has not been clear about what kind
of society this new form may be. Does the spectacular energy
of present-day Germany represent the hideous convulsions
of a death agony, or the — als6 hideous, let us remember —
pangs of birth ? This is a question that we must answer if
we arc to understand what is happening in the world.

The dispute can easily become merely verbal. No one
will deny that there are in German society elements which
it shares with traditional capitalist society ; and, equally,
no one will deny that there are many other* elements in
German society not found in traditional capitalism. It might
seem, therefore, that we could give either answer that we
might choose. But for us the problem is not verbal. We have

214

THE GERMAN WAY

defined what we mean by capitalism, by socialism, an^ by
managerial society. We are interested, here as elsewhere,
not in the static condition of the moment, but in the trend
of development, the direction of change. With this back-
ground, we are inquiring into facts, nor words, when we
ask whether Germany to-day is a type of capitalism or
whether it is in the first developmental stages of a new order
of society — specifically, managerial society.

A preliminary observation, to which I have already
referred, must be repeated. By a “ decadent ” society, I shall
mean no more than a type of society which is nearing its end
in time and history. There are many who call Nazi Germany
decadent because its rulers lie a great deal, are treacherous,
break treaties, exile, imprison, torture, and murder worthy
human beings. It is a fact that the Nazi rulers often carry
out such actions — though such actions are more common
among all rulers of all times than our moraUsts like us to
believe. But it is not at all a fact that such actions are
typical signs of decadence. It would be altogether impossible
to establish any necessary link between lies, terror, tyranny
on the one side and historical decadence on the other.
Indeed, if historical experience establishes any correlation
in this matter, it is probably a negative one : that is, the
young, new, rising social order is, as against the old, more
likely to resort on a large scale to lies, terror, persecution.
Tragedy always seems more heroic than worldly success ;
ideal characters we usually are taught to find on the losing
side. Hector was the noblest hero of the Trojan War ; it
was the Greeks who introduced the treacherous Trojan horse ;
but the Greeks won. The splendid personal traits of many
of the late feudal lords did not prevent them and their
system from going down in ruins. By the time of Cervantes
those traits were the subject for nostalgic ridicule, not for
imitation. There is no historical law that polite manners
and “justice ” shall conquer. In history there is always the
question of whose manners and whose justice. A rising social
class and a new order of society have got to break through
the old moral codes just as they must Ixreak through the old

815

THE MANAGERIAL REVOLUTION

economic and political institutions. Naturally, from the
point of view of the old, they are monsters. If they win,
they take care in due time of manners and morals.

)|e 4c 3ie ♦ )|c %

All orthodox Marxists believe that Nazi Germany is a
form of decadent capitalism. They put it in this way :
fascism is the political organization of capitalism in decay ;
it is the extreme end point of “ monopoly finance-capitalism.”
In reality, this opinion follows simply from the crucial
assumption which we have so frequently met, the assumption
that ‘‘ socialism is the only alternative to capitalism.”
Nazism certainly is not the free, classless society of socialism.
Consequently, by virtue of tlie assumption, it must be a type
of capitalism. This deduction, granted the assumption, is
perfectly sound, and saves all the bother of a careful
examination of what is actually happening.

This belief is by no means confined to Marxists. It is held
also by many capitalists. In particular it was held, prior
to 1933, by a large section of the German capitalists who
were, after all, the ones most intimately concerned. The
opinion of this section was summed up by a remarkable article
published in the late summer of 1932 in one of the journals
of German heavy industry, and reproduced in The Brown
Book of the Hitler Terror,^ This article is well worth quoting
at some length :

“ The problem of consolidating the capitalist regime in post-war
Germany is governed by the fact that the leading section, that is,
the capitalists controlJing industry, has become too small to
maintain its rule alone. Unless recourse is to be had to the
extremely dangerous weapon of purely military force, it is necessary
for it to link itself with sections which do not belong to it from a
social standpoint, but which can render it the essential service
of anchoring its rule among the people, and thereby becoming
its special or last defender. This last or ‘ outermost ’ defender of
bourgeois rule, in the first period after the war, was Social
Democracy.

^ This book was published in 1933 by Victor GoUanez, Ltd^ with whose
kind permission I am using the quotation.

2X6

THE GERMAN WAY

“ National Socialism has to succeed Social Democracy in pro-
viding a mass support for capitalist rule in Germany. . . . Social
Democracy had a special qualification for this task, which up to
the present J^ational Socialism lacks. . . . Thanks to its character
as the original party of the workers, Social Democracy, in addition
to its purely political force, also had the much more valuable and
permanent advantage of control over organized labour, and by
paralyzing its revolutionary energies chained it firmly to the
capitalist State. . , .

“ In the first period of re-consolidation of the capitalist regime
after the war, the working class was divided by the wages victories
and social-political measures through which the Social Democrats
canalized the revolutionary movement. . . . The deflection of the
revolution into social-political measures corresponded with the
transference of the struggle from the factories and the streets into
Parliament and Cabinets, that is, with the transformation of the
struggle ‘ from below ’ into concessions ‘ from above.’

‘‘ From then onwards, therefore, the Social Democratic and
trade union bureaucracy, and with them also the section of the
workers whom they led, were closely tied to the capitalist State
and participation in its administration — at least so long as there
was anything left of their post-war victories to defend by these
means, and so long as the workers followed their leadership.

“ This analysis leads to four important conclusions :

“ I. The policy of ‘ the lesser evil ’ is not merely tactical, it is
the political essence of Social Democracy.

“ 2. The cords which bind the trade union bureaucracy to the
State method ‘ from above ’ are more compelling than those which
bind them to Marxism, and therefore to Social Democracy ; and
this holds in relation to the bourgeois State which wants to draw
in this bureaucracy.

“3. The links between the trade union bureaucracy and Social
Democracy stand or fall, from a political standpoint, with parlia-
mentarism.

“ 4. The possibility of a Liberal socia Ipolicy for monopoly
capitalism is conditioned by the existence of an automatic
mechanism for the creation of divisions in the working class. A
capitalist regime which adopts a Liberal social policy must not
only be entirely parliamentary, it must also be based on Social
Democracy and must allow Social Democracy to have sufficient
gains to record ; a capitalist regime which puts an end to these

217

the] .^MANAGERIAL REVOLUTION

gains must also sacrifice parliamentarism and Social Democracy,
must create a substitute for Social Democracy and pass over to a
social policy of constraint.

“ The process of this transition, in which we are at the moment,
for the reason that the economic crisis has perforce blotted out
the gains referred to, has to pass through the acutely dangerous
stage, when, with the wiping out of these gains, the mechanism
for the creation of divisions in the working class which depended
on them also ceases to function, the working class moves in the
direction of Communism, and the capitalist rule approaches the
emergency stage of military dictatorship. . . . The only safeguard
from this acute stage is if the division and holding back of the
working class, which the former mechanism can no longer
adequately maintain, is carried out by other and more direct
methods. In this lie the positive opportunities and tasks of
National Socialism. . . .

“ If National Socialism succeeds in bringing the trade unions
into a social policy of constraint, as Social Democracy formerly
succeeded in bringing them into a Liberal policy, then National
Socialism would become the bearer of one of the functions essential
to the future of capitalist rule, and must necessarily find its place
in tlic State and social system. The danger of a State capitalist
or even socialistic development, which is often urged against such
an incorporation of the trade unions under National Socialist
leadership, will in fact be avoided precisely by these means. . . ,
There is no third course between a re-consolidation of capitalist
rule and the Communist revolution.”

In connection with this brilliant analysis, let us note in
passing its confirmation ofrthe estimate we have previously
made of the social role of Social Democracy (the reformist
wing of Marxism) as a capitalist movement. But let us remark,
second, that this analysis coincides exactly with the Leninist
analysis. If its source were not given, there would be no
w^y of telling whether it came from a capitalist or a Leninist
pen.^ (Naturally, neither reformist nor liberalism could

^ As a matter of fact, the analysis may be from a Leninist pen. I have been
unable to verify the authenticity of the quotation. Since The Brown Book
was a Comintern propaganda document, designed to justify the Stalinist
policy in Germany, it is possible that the source of this quotation, as of so
many others, is the fertile brain of the GPU. However, this would not alter
the point I am making, inasmuch as many German capitalists undoubtedly^
in xgja, did hold tho views eitpreased in die quotation*

atS

THE GERMAN WA Y

produce such a critique.) Most important of all, along with
Leninism it shares the basic assumption : socialism (com-
munism) is the only alternative to capitalism. It is its reliance
upon this assumption that finally brings the analysis, in spite
of its brilliance, to grief. Even, however, apart from the
assumption, the analysis was plausible in 1932, when it was
made. It expressed, we might say, a chance, and the only
chance, for capitalism to take. But 1941 is nine years later.
We have the experience of nine more years to learn from.
The lesson of this experience conclusively refutes the analysis
of 1932.

The view that Nazism was a type of capitalism, a late,
or the last, stage of capitalism, had a reasonable probability
on the evidence a decade ago. It was a belief capable of
verification. The verification would have been found in the
tendency of Nazism to strengthen or at least maintain the
typical institutions of capitalism and the power and privileges
of the capitalists. The Italian experiences had not been
conclusive. There was no way to decide the problem with
confidence beforehand. By now it has been decided. The
decision refutes the theory that Nazism is a form of capitalism

The view that Nazified Germany is decadent capitalism,
the political organization of capitalism in decay, is prima
facie implausible in 1941, no matter how legitimate a guess
it was in 1932. As compared with the undoubtedly capitalist
nations of France (before her fall) and England (and the
United States, too), and relying upon the analogies Aat may
be drawn from comparable historical situations, Germany
exhibits the signs not of decadence but of social revolution, of
the transition to a new structure of society.

Before reviewing some of the more important' of these
signs, let us recall the extraordinary handicaps faced by
Germany at the conclusion of the first world war. She had
just been defeated in the greatest war fought up to that time
and had been compelled to sign the harshest peace terms in
modem European history. Important sections of her
territory bad been lopped off, and she had been surrounded
by satellite states of her enemies. She had been stripped of

THE MANAGERIAL REVOLUTION

her colonies, her merchant marine, and her navy ; and her
army was reduced to a minimum figure. Her people had
been exhausted by the war and by the famine which occurred
during its last year. She was saddled with reparations not
merely in money — which she could and did pay largely
through borrowings — but in kind, which latter meant the
loss of material goods. Her opponents had carved up all the
juiciest slices of the world in what they took to be their own
interests. It is against this background that we must place
contemporary Germany.

Nazi Germany eliminated unemployment within a couple
of years from Hitler’s ascension to power. The means
whereby this was done are irrelevant to our inquiry ; the
fact that it was done is crucial. Mass unemployment is the
primary indication of the collapse of a given form of society.
The great capitalist powers have proved that they cannot
get rid of mass unemployment under capitalist institutions.
Even after a year and a half of war, after more than half a
year of the Battle of Britain,” there were still, according to
official figures — which probably understate the facts and
besides do not include so-called ‘‘ unemployables ” — nearly a
million unemployed in England. Nazi Germany’s elimina-
tion of unemployment is, in and by itself, a sufficient proof
that Germany has left the basis of capitalism and entered the
road of a new form of society. Everyone knows and many
have stated that it is not by virtue of the capitalist elements
remaining in German culture that unemployment has been
got rid of, but through the introduction of non-capitalist
methods.

Similarly, Germany has broken through the restrictions of
capitalist finance. According to all the “ laws ” of capitalism,
Germany should have been bankrupt five years ago ; its
currency should have gone into a wild inflation ; it should
have b^n impossible for the state to finance its vast imder-
takings. But, under the state control of finance, none of the

laws ” held* Again, through state control of imports
and exports, Germany has been able to carry on foreign
trade without the means, according to capitalist standards^

MO

THE GERMAN WAY

of doing SO. And huge outlets — primarily in state enter-
prises — have been found for the investment funds that sit idly
in the banks of the great capitalist powers.

In territory, Germany has been expanding rapidly, first in
peace and now in war. The expansion is not confined to
lands brought formally within the boundaries of the Reich
but includes also the nations drawn within the Reich’s sphere
of influence. Rapid territorial expansion has always been
a sign not of decadence — societies break up in their decadent
period — but of renewal.

Germany makes war better than the undoubtedly capitalist
nations. If we take into account the difficulties that Germany
had to overcome in preparation for war, compared to France
and Britain with their immensely greater material resources,
the superiority of Germany’s war-making is far more striking
even than it seems. As in the case of rapid territorial expan-
sion, the ability to make war well is never a sign of decadence
but of its opposite.

By all reliable accounts and by common experience, Nazi
Germany inspires in millions of persons a fanatical loyalty.
This, too, never accompanies decadence : the subjects of a
decadent regime tend to be characterized by indifference,
cynicism, or at most a dogged and rather weary devotion to
duty.

A further striking outward sign is the fact that the out-
standing political, military, and economic leaders of Germany
are much younger, averaging probably a generation younger,
than the leaders of France and Britain. To carry on the
new war, England and France had to rest on the old men
who had been leaders in the first world war and were none
too young even then. In Germany, there are new men
and, comparatively, young men. This difference symbolizes
well the feet that the social systems of England and France
at the outset of the second world war were remnants of the
past, Germany’s a start toward the future.

Finally, there is the notorious Nazi “ Fifth Column.” The
term Fifth Column ” is used so loosely, meaning often no
more than those whom a speaker or writer disagrees with,

THE MANAGERIAL REVOLUTION

that its full significance is lost sight of. All modem nations
have spies and paid agents in other nations, including enemy
nations. These do not constitute a Fifth Column in the
distinctive sense of the term. The Nazi Fifth Column is made
up of persons within other nations who are more loyal to
Nazi Germany, or to the general conception of life of which
Nazism is ohe embodiment, than they are to the nation of
which they are residents and perhaps citizens, and to its
conception of life. This is why genuine Fifth Columns
(whether Nazi or Stalinist) cannot be wiped out. Wiping
them out is not a question of catching spies and intelligence
agents at work ; it would have to include changing inner-
most feelings, loyalties, ideologies ; and the propaganda
based on capitalist ideologies is no longer strong enough to
do this fully. Hitler, like Stalin, can always coimt on a
Fifth Column in every nation. Such a phenomenon is
intelligible only if Hitler and Stalin both represent a social-
revolutionary force, a force which cuts across and through
the boundaries of capitalist-nationalism. So long as capitalism
was established as the world system with all nations part of it,
any considerable development of a Fifth Column was im-
possible. The rise of the Fifth Column marks the breakdown
of capitalist-nationalism, of the capitalist nation as the
ultimate political entity.

This prima facie evidence is sufficient to refute the opinion
that Nazi Germany is a type of capitalism and to show that
it is on the contrary an early stage of a new type of society.
This evidence corresponds also with the underlying longer-
term facts. The managerial developments did not begin in
Germany with Hitler. Rather is Hitler’s rise to power a
phase of the basic managerial developments and a political
expression of the fact that during these last eight years Ger-
many has been turning the corner from the down-road of
decadent capitalism, with managerial intrusions, to the up-
road, of early managerial society, with capitalist remnants.

We find in Germany to an ever-increasing degree those
structural changes which we have discovered to be character-
istic of the shift from capitalism to managerial society. In

332

THE GERMAN WAY

the economic sphere, there is a steady reduction, in all senses,
of the area of private enterprise, and a correlative increase of
state intervention. There was a brief period, immediately
following the Nazi accession to state power, when the trend
seemed to be in the opposite direction, when even a few
enterprises which had been under state operation in the
Weimar Republic were handed back to private capitalists.
But this quickly reversed. The state intervention in the
economy occurs in numerous directions. Outright state
ownership and operation, advancing in all fields, are par-
ticularly ascendant in the extensive areas of new enterprise
opened up during the Nazi rule. However, to confine
attention to outright ownership and operation with all legal
formalities would be deceptive. 'Virtually all economic enter-
prise is subject to rigid state contiol ; and it is control which
we have seen to be decisive in relation to the instruments of
production. Legal forms, even income privileges, are in the
end subordinate to de facto control.

Even where private owners still exist in Germany, the
decisions about “ their ” property are not in their hands.
They do not decide what to make or not to make. They do
not establish prices or bargain about wages. They are not at
liberty to buy the raw materials they might choose nor to seek
the most profitable markets. They cannot, as a rule, decide
how to invest or not invest their surplus funds. In short, they
are no longer owners, no longer effective capitalists, whatever
certificates they may have in their deposit boxes.

The regulation of production in Germany is no longer left
to the market. What is to be produced, and how much, is
decided, deliberately, by groups of men, by the state boards
and bureaus and commissions. It is they that decide whether
a new plant shall be built or an old plant retired, how raw
materials shall be allotted and orders distributed, what quotas
must be fulfilled by various branches of industry, what goods
shall be put aside for export, how prices shall be fixed and
credit and exchange extended. There is no requirement
that these decisions of the bureaus . must be based on any
profit aim in the capitalist sense. If it is thought expedient,

22 $

THE MANAGERIAL REVOLUTION

for whatever reason, to produce, for example, an ersatz rubber
or wool or food, this will be done even if the production
entails, from a capitalist point of view, a heavy loss. Similarly,
in order to accumulate foreign exchange or to stimulate some
political effect in a foreign nation, goods will be exported
regardless of loss. A factory may be compelled to shut down,
even though it could operate at a high profit. Banks and
individuals are forced to invest their funds with no reference
to the private and voluntary opinions about “ risks ” from a
profit standpoint. It is literally true to say that the Nazi
economy, already, is not a ‘‘ profit economy.”

The workers, on their side, are no longer the ‘‘ free prole-
tarians ” of capitalism. Under » Nazism the workers are,
indeed, free from unemployment. At the same time they
cannot, as individuals or through their own independent
organizations, bargain for wages or change jobs at will. They
are assigned to their tasks, and their labour conditions are
fixed, by the decisions of the state bureaus and commissions.
Millions of them are allotted to the vast state enterprises.

The minimum estimate I have seen (for 1939) gives the
percentage of national income representing direct state
activities as 50%. With the reduction in the area of private
enterprise and the increase of state enterprise, goes also a
corresponding reduction in the social position of the private
capitalists. So far as control over the instruments of produc-
tion goes, the capitalists are already near the bottom. As to
income privilege : a recent estimate by a New York statistician
gives as a mere 5% the share of the German national income
going to profits and interest. This is a substantial reduction
from the 1933 figures, in spite of a huge increase in the total
national income, which, under capitalism, would normally
be accompanied by a percentage increase in profits. In the
United States, profits and interest are 20% of the national
income, even excluding all so-called ‘‘ entrepreneurial profits.’’
Moreover, of the German capitalists’ 5%, the greater part is
appropriated by the state as taxes and contributions.”
The statistics, however — which are, in any case, not reliable —
fail to indicate the full meaning. The German capitalists as

224

THE GERMAN WAY

capitalists (not necessarily always as individuals functioning in
other capacities), because of their loss of control over the
instruments of production — a loss which leads progressively
to their loss of legal ownership rights and of income — slip
from their position as the ruling class in Germany. They
become, more and more, simply tolerated pensioners, rapidly
approaching social impotence.

This reduction toward impotence of the capitalists is accom-
panied by the rise of precisely the class which we found to be
at the top in Russia : the managers, together with their
bureaucratic and military colleagues. This is the class (in
which some individual capitalists have found a place) that
even to-day in Germany holds the largest share of control
over the instruments of production, wields the effective power,
and already is receiving the lion’s share of the piivileges.
Even in Nazi law, the position of the manager is beginning
to be openly recognized. For example, it is the de facto
manager of a factory who has final say, subject to certain
bureaus and state-controlled courts, about labour disputes —
that is, has the right of controlling access to the instruments
of production, and is backed by the state in that right.

How strange that it has not yet been remarked how seldom
we find a manager among the voluntary or forced exiles from
Nazi Germany ! There are artists and writers among the
exiles, ideologists and politicians, unassimilable foes of the
new regime, storekeepers and professionals and teachers, and
not a few capitalists, both Jews and Christians. But almost
never a manager. It is strange that this has not been remarked
but not strange that it is the case. For the managers realize
that the society which is developing is their society.

In short, Germany is to-day a managerial state in an early
stage. Structurally^ it is less advanced along managerial lines
than Russia ; it retains as yet more capitalist elements.
There is, we might almost say, a dual social structure at
present in Germany. The managerial institutions and modes
of operation are growing and expanding inside the still-
existing cocoon of capitalism, which lingers as a protective
coating and at the same time hides the life within. The

225

THE MANAGERIAL REVOLUTION

direction counts ; and the direction is toward the dropping
of the remaining capitalist elements. But, though structurally
less advanced, Germany is without most of those major
weaknesses which we noted in the case of Russia. Its indus-
trial and technological foundation is far stronger ; the rising
managerial class is much larger, better trained, more able.
This is why Hitler had no qualms about the Russian Pact ;
he knew that, in the Pact, Russia was the minor partner.

« ♦ ♦ ♦ ♦

Many commentators believe that they adequately sum up
present-day Germany, including all those features of German
society which I have been listing, by saying that “ Germany
has a war economy.” In their dismissal of all problems with
the help of this magic reference to a “ war economy ” there
lies a whole series of grave misconceptions.

In the first place, we must realize that all economies are war
economies. To suppose that a ‘‘ war economy ” is some special
and peculiar kind of economy rests on the naive assumption
that war is something special and peculiar in the history of
human societies. The truth is that war, up to the present and
into the discernible future, is a normal and integral part of all
human societies. All social groups — tribes, empires, city-
states, nations including all capitalist nations — have made
war constantly. The majority of the time (and this holds for
all the capitalist nations) they have been actually at war,
actually fighting some other group. When not fighting,
they hav^ been recovering from a previous fight and simul-
taneously getting ready for the next one. Our moral beliefs
are such as to make us like to think that war is an “ exceptional”
type of event ; the facts are that it is not. To say this is not
to praise war or consider it a “ good thing ” but only to tell
the truth.

It is ridiculous to say that Nazi Germany has a war economy
and England and France do not, or did not. It was simply
that Nazi Germany had a better, a more effective, war economy
than her rivals ; taking comparative material resources into
account, a much better war economy, England and France

286

THE GERMAN WAY

won the first world war, and arranged the world in the way
that they thought best suited their war aims. Before that
war had ended, they began preparing for the second world
war. No one noticed England sinking its fleet, razing its
ocean bases, or France dropping universal conscription or
building workers* houses instead of the Maginot line.

In the second place, it is not true that all “ war economics ’*
are alike. Calling a given economy a “ war economy *’ tells
us nothing. Societies prepare for and make war after the
manner of such societies as they are. In wartime, perhaps,
the social relations are drawn somewhat tighter ; they are not
fundamentally altered. A feudal society doesn’t cease being
feudal when it makes war — as the ruling class of feudal society
did all the time, since it had hardly anything else to do. A
capitalist nation doesn’t cease being capitalist whefl- it starts
war ; it fights its capitalist wars capitalistically. It is not even
true that a democratic nation ceases to be democratic when
it fights : Did England and the United States stop being
democracies during the many wars they fought in the nine-
teeth century ? They were capitalist democracies, and they
fought as capitalist democracies.

If it is objected that modern war is different,** is “ total
war ** and must be fought by totalitarian methods *’ ; then
the answer is : Yes, modern war is indeed different, and the
reason for this difference is that modern war is ceasing to be
capitalist war. The first world war was the last great war of
capitalist society. Already in that war, though to a less
extent than is now remembered, the belligerent states found
it necessary to modify their institutions sharply in order to
carry on the war. The second world war is the first great war
of managerial society. In this war the capitalist institutions
no longer have a chance of winning. In order to win the
war, these institutions must be transformed* This does not
mean changing just for the duration.” It is war that decides
the survival of social systems as well as of nations. The fact
that the way to win wars is changing is only a phase of the
larger fact that society as a whole is changing.

Third, we mtist observe that war economies ** are not only

say

THE MANAGERIAL REVOLUTION

war economies. War is an integral part of social develop-
ment in history as it happens ; and therefore much more than
just fighting comes as a consequence of, or in connection with,
war measures. It may be an absurd and shocking waste that
roads are built, transportation and communication expanded,
more goods sold, inventions stimulated, houses constructed,
in connection with preparing and fighting a war ; but, as
things are, this may be and often is the case. What we call
things depends upon the interests we predominantly have
with reference to them. If, in the light of our present chief
interests and fears, we call the Nazi economy a war economy,’’
we might equally well, from other points of view, call it a
‘‘ full-employment economy ” or a ‘‘ housing economy ” that
has built nearly 2,000,000 workers’ houses or the auto-
speedway economy ” or the airplane economy.” During
the five years from 1933 (when Hitler took power) to 1938,
German armament production increased 300% ; but the
production and distribution of the basic goods, such as food
and clothing, upon which the real standard of living rests
increased also, by a full third. ^

Finally, it must be observed that, if one type of economic
structure enables one nation to fight a war better than it can
be fought with other types of economy, then all nations
within the sphere of operations of the given nation — which
to-day means the whole world — must adopt that type of
economy. This may be regrettable, but it obviously follows.
If fighting with guns is more effective than fighting with bows
and arrows, and if economy A can produce lots of guns and
economy B only bows and arrows, then the nation with
economy A is sure to conquer the nation with economy B
unless the latter nation adopts the A type of economy. If the
managerial structure of economy is superior — as it clearly is —
to the capitalist structure for war purposes, then for that
Reason alone, even if there were not, as there are, many other

^ One source for these figures is the Dec. 6, 1940, issue of the authoritative
United States News, According to the United States News, the analysis of
Nazi economic methods containing these figures was prepared for the study
and use of the defexu^ administration*

228

THE GERMAN WAY

reasons, capitalist economy would have to give way, on a
world scale, to managerial economy.

♦ « ♦ « *

The pattern of the German way to managerial society is, in
notable respects, different from the pattern of the Russian way.
This difference in pattern is one of the chief of those factors
which have obscured the identity in historical direction be-
tween the developments in the two countries. We saw that
the Russian solution of the managerial triple problem goes
roughly in the following order : (i) speedy elimination of the
capitalists at home, together with the staving off of the
capitalists abroad ; (2) the more gradual and drawn-out

curbing of the masses under the managerial institutions ;
(3) the contests to come with rival sectors of the managers.
The basic German pattern reverses the first two stages, which
yields : (i) the fairly rapid curbing of the masses, in order to
prevent a repetition of the Russian pattern and to forestall a
break-through toward a free, classless society ; together with
the alignment of the masses under a managerial ideology and
to an increasing extent under managerial institutions ;
(2) the more gradual reduction of the home capitalists to
impotence, combined with direct onslaught against the
capitalists abroad and the institutional bulwarks of world
capitalism ; (3) the contests to come with rival sectors of the
managers.

The pattern of the German way thus permits the utilization
of the capitalists in the curbing of the masses along managerial
lines (the first stage), and then the utilization of the pressure of
the masses for the reduction of the capitalists (the second
stage). The managerial curbing of the masses’’ does not
mean only a physical terror directed against the masses.
Physical terror is, in the long run, secondary to the job of
winning the minds and feelings of the masses to a set of attitudes
the consequences of which arc the abandonment of both
capitalism and the fight for socialism, and the acceptance of
the managers and the institutions of managerial society. It
was just here that the capitalists helped prepare for their own

229

THE MANAGERIAL REVOLUTION

iater ruin. Their support of the Nazis did block a repetition
of the pattern of the Russian way ” in Germany : the masses
were “ curbed ’’ ; but the curbing was accomplished along
lines that in the end are incompatible with the maintenance
of capitalist rule and prepare only for the victory of the
managers.

This apparently was suspected by the German capitalists, as
indicated in the last paragraph of the quotation which I have
cited above. Nevertheless, the action of the capitalists, or a
section of them, in making what seemed to be an alliance with
Nazism was probably justified under the circumstances. The
only alternative was the Russian way. That would have
meant drastic and rapid elimination. The Nazi way gave the
capitalists a breathing space, was at least slower in tempo
from their point of view. Bad as the chance was, it was at
least better than the alternative. As it turns out, the chance
was not good enough. The German way is slower — even
now, after eight years, the German capitalists are not finished ;
but it is merely a slower death as against a quick one.

One other, and this a real, advantage accrued to the
capitalists, not as a class but as individuals, from the German
way. It gave some of them more opportunity, as individuals,
to fuse themselves into the new order, to become managers
as some feudal lords became capitalists. Thus, as individuals,
they are able to survive the disappearance of their class, to
take, in fact, their place in the new ruling class. This is
exactly what the more vigorous and technically best trained
of the German capitalists have been doing.

The pattern of the German way, like the Russian pattern,
is capable of approximate repetition elsewhere. It was natural
for Germany, holding, of all the great nations, the poorest
cards in the capitalist deck, to be the first of the great nations
to turn vigorously toward the new social structure ; just as
it was natural for France, England, an^ the United States,
with the most favourable capitalist hands, to resist the turn
most bitterly — ^why should they want to take the risk of a
new deck when they are doing at least better than anyone
else with the old ? Germany, unlike Russia, bad an advanced

1130

THE GERMAN WAY

industry and technology, an advanced culture, and a large
and trained body of managers. It is perhaps these factors
that dictated the difference between the German pattern and
the Russian.

« ♦ 4c « « 4c

The Nazi assumption of power, as we saw, swung Germany
from the decadent stages of capitalism with increasing mana-
gerial intrusions into the initial stages of managerial society,
with (at first, considerable) capitalist leftovers. Internally,
Germany still remains in an early stage. However, it was
impossible to complete the internal revolution without at
once going over to the more grandiose external tasks of the
managerial future. Excluding Russia from consideration here,
Nazism gave Germany, we might say, a head start over the
other great powers in getting ready for the managerial world
system. As we noticed, the natural focus of one of the future
super-states is the area of advanced industry in Europe.
The German boundaries already, in 1933, included a big
share in this area. The first great external political task
was the extension of Germany’s strategic base to cover, directly
or indirectly, the entire European area of advanced industry,
which automatically meant de facto authority over Europe as
a whole.

In 1935 the extension began, with the victory in the Saar
plebiscite. From that time on it has gone steadily smashing
outward. The Nazi success, year after year, can only be
explained by the ever-increasing weakness of the capitalist
structure of society. Germany still retained much of capital-
ism, it is true ; but her strength in relation to the other powers
was derived, not from the capitalist elements in German
society, which she shared with France and England, but from
the managerial elements wherein she differed from them.

The first series of extensions of the base were achieved
peacefully. The Saar, Austria, Czechoslovakia, Memel were
incorporated. Unquestionably the Nazis were glad to avoid
war. What had they to lose from the peaceful extensions ?
The Nazis would have gone on by peace ; so long as the aims
were reached, «>peace, or only minor fighting, was preferable.

THE MANAGERIAL REVOLUTION

Finally, in 1939, capitalist France and England realized that
the continuation of the process meant their death and that
the process was going to continue. They had tried all means
to avoid war, to hide from themselves what was happening.
But Munich was of no more use than threats. Desperately,
if any war was ever entered upon desperately, they took the
field. The Nazis would still have been willing to win without
fighting — why not ? — or to fight only the easy Polish war.
They thought, no doubt, that the announcement of the Soviet
Pact might head off major war. And, after conquering
Poland, Hitler again tried for a deal. But the issue for
England and France was now plainly national and social
survival, and they took the plunge. Germany had, of course,
to accept the challenge.

The first part of the second world war, up to the fall of
France in June, 1940, was in reality the continuation of the
strategic extension begun in 1935. This phase, the con-
solidation of the European base, was completed with France’s
surrender. It is completed irreversibly and can no longer be
undone whatever the outcome of the succeeding phases of
the war, which are really other wars. This consolidation,
fundamental to the world politics of managerial society, is
not going to be dissolved, not even if the present German
regime is utterly defeated. The day of a Europe carved
into a score of sovereign states is over ; if the states remain,
they will be little more than administrative units in a larger
collectivity. Any attempt to redivide Europe would collapse,
not in the twenty years it took the Versailles system to collapse,
but in twenty months.

With the completion of the first phase of the war, Germany
was naturally willing to have the war end. Again, why not ?
With the Continental base consolidated, England by itself
would be economically and socially helpless, and would have
to gravitate into the general European orbit. Therefore, after
France’s surrender, Hitler again offered peace and throughout
the summer of 1940 was clearly trying for a deal with England
harder than he was trying to conquer her by military means.
From the time of Mein Kampf onward, Hitler has recognized

THE GERMAN WAY

that a deal between Germany and England would be much
more advantageous to the European super-state of the future
than to have England conquered by Germany. With a deal,
in which England would necessarily be subordinate, the
tendency would be for the British Empire to keep attached
to the European central area. In the course of the military
conquest of England, most of the Empire tends to drop off
to the spheres of the United States and the Asiatic central
area. But the English capitalists weighed the costs and
decided to keep on fighting.

Thus the second phase of the war, really a second war,
goes on as I write. In this phase, with most of the strategic
European base consolidated, the effect is to wreck capitalists
and capitalist institutions abroad — in the first instance, the
British Empire, greatest and most typical capitalist institution.
Interestingly enough, this phase thus begins before the task
of reducing the German home capitalists to impotence is
finished. Such overlappings are common in history.

The general outcome of the second war is also assured.
It is assured because it does not depend upon a military
victory by Germany. The hopelessness of the position of
the British capitalists has been shown from the beginning
of the second world war by the fact that they have
absolutely no peace plans (“war aims’’). During the
first year and a haff of the war, their spokesmen did
not even pretend to be able to formulate war aims. If
they finally make some sort of statement, it will be empty
of all meaningful content. They cannot have war aims (peace
plans) because there is no possible solution on a capitalist
basis. England, no matter with what non-European allies,
cannot conceivably hope to conquer the European Conti-
nent ; and could no longer run the Continent if she could
conquer. Revolutions on the Continent, even if they should
get rid of the Hitler regime, cannot benefit England. Nor
could they repartition Europe into independent, fully sovereign
states. The same general result would follow them at a
Hitler military victory : the consolidation of the European
strategic base, with England compelled to integrate into it.

m

THE MANAGERIAL REVOLUTION

Military ups and downs, mass revolts, can alter the time
schedule for this general outcome, can mean more or less
chaos in the intervening period, but there is no prospect of
its being essentially changed.

But the consolidation of the European central area docs not
end the world political process. There remain the contests
with the other sections of the managers — with Russia as we
have already seen, and the struggles among the European,
the Asiatic, and the American centres for their respective
shares in the rest of the world. Though the perspective of
these wars stretches into the future, their first actions are
already beginning, overlapping the second phase of the second
world war. By the end of 1940 it was clear that the focus of
the war was shifting, that the result of the European struggle
was in fundamentals decided, and that a new, third, phase
was beginning wherein the mighty opponents of the future —
the three political structures based on the three central areas
— were undertaking their first trials of strength. These wars
of the developing super-states will not end with the end of
this war. Their results, we have noted, is sure to be incon-
clusive, since none of the three central areas can firmly conquer
any of the others. But they will be fought none-the-lcss, and
in them the disposition of the rest of the world will be decided,
and re-decided.

In a war such as started in September, 1939, we may plainly
observe the social-revolutionary effect of the war process.
Considering the war from the point of view of Germany, this
revolutionary effect is threefold. In the first place, the Nazi
armies carry the new and revolutionary ideas and institutions
into the lands they conquer. Sometimes this is done by the
direct imposition of these ideas and institutions upon the
conquered peoples. But it also operates by contagion, or as
a semi-voluntary consequence of military d^eat, as in France.
Second, the opposing nations discover that they can compete
in war with Germany only by going over more and more,
not merely to the same military means that Germany usta,
but to the same type of institutions and ideas that characterize
Genhan society. This somewhat ironic relatioa holds ; the

•S4

THE G E RMA

surest way, the only way, to defeat Germany woul be for
the opposing nations to go over, not merely to institu ion
and ideas similar to those of Germany, but still further along
the managerial road than Germany has yet gone. For, just
as the strength of the German war-making machine is derived
from her managerial, non-capitalist elements (combined with
her advanced productive plant), so are her weaknesses in war-
making the result chiefly of the remaining capitalist elements.

Third, the war process speeds up the revolution inside
Germany itself. In general, wars speed the tempo of the
social tendencies which are present, but more leisurely, in
peace-time. In the case of Germany now this is plainly
apparent : the war-making means the still greater extension
of the state throughout the economy ; the still faster cutting
off of the arena of private enterprise ; the still further re-
duction of impotence of the already fatally undermined private
capitalists ; the still deeper reliance upon the managers and
their bureaucratic and military colleagues as the only ones
who can run the stale ; the still sharper penetration of the
managerial ideologies.

The developments which have already taken place and
those which may be confidently predicted for the near future
exclude a reversal of the social direction which has been
established in Germany. Germany, and with it the rest of
Europe, are leaving capitalism behind, and moving toward
the managerial structure of society. They are not going to
shift back again. Capitalism is not going to be restored,
but on the contrary what is left of capitalism is going to be
eliminated. British and American capitalists may dream of
a docile new Weimar Republic or of a friendly German
monarchy or of a Europe pulverized into an even greater
number of even smaller states than were left under Versailles.
But the dream is absurd on the face of it. It couldn’t work
even in the 1920’s. How infinitely less a chance is there for
it to work in the ’40’s !

The German capitalists also, no doubt, dream of a restored
capitalism In Germany. If Germany is definitely victorious
in the war, they presumably hope for a restored “ liberty,”

m ^

THE MANAGERIAL REVOLUTION

with unchecked rule, power and privileges once again securely
m their hands. Even some of the Nazi politicians, perhaps
even Hitler himself, have some such perspective as this. But
it is too late ; too much has happened. The servants have
outgrown the masters. The institutions and the ideologies
have been too profoundly altered. The managers and their
allies know that they can wield the power, have been wielding
it — why should they give it up ? And the masses would not
permit the reversal of direction. The road back to capitalism
would mean, as the masses would see it, going back to the
unemployment, the humiliations, the confusions, the moral
and social pointlessness of 1932. However hard the lot of
the masses under Nazism, they can see hope only further
along the road that has been taken, not in a return. If the
Hitler regime will not continue on this road, will not complete
the reduction of the capitalists to impotence and the elimina-
tion of the leftovers of capitalism, then it will give way to a
new regime, a regime differing from Hitler’s not by being
capitalist, but by being a more matured representative of the
managerial future.

Two events of recent years, secondary in themselves, have
been striking symbols of the fact that the social revolution in
Germany cannot be reversed. The first was the retirement
of Schacht from the front rank ; the second, the exile of
Thyssen. Schacht was not a big capitalist in his own right.
He was a trained and expert representative of the capitalists.
For the first years of Nazism he continued as a capitalist
representative, trying no doubt to guide events along the
lines envisaged by the capitalists in the quotation I have
given earlier in this chapter. The' new regime welcomed
him and used him. Then the revolution went beyond Schacht.
Perhaps he, like the purged Russians, would have been willing
to fuse himself into the managerial order. But, also like the
Russian trials and executions, his virtual retirement was a
ritualistic act in recognition of the dying of the old regime.
Thyssen, on his side, was one of the biggest capitalists and
prior to 1933 the leading supporter of the Nazis from among
the big capitalists. The exile of Thyssen, and his subsequent

936

THE GERMAN WAY

renunciation of Nazism, signifies the recognition by German
capitalism of the error in their original hope that Nazism
could be the saviour of German capitalism, their under-
standing that Nazism is merely a variant pattern in the
liquidation of capitalism.

None of this means, of course, that the revolution will be
stabilized on the present Nazi lines. Present-day Nazism is,
as all our previous discussion will have shown, a primitive
stage of the managerial development of society. With the
consolidation of the managerial social structure on a world
scale, Nazism will fade into hardly recognizable forms,
the direction is established. Nor is the “ Germany ” of to-
day the final type of the state of the future. What will emerge,
as we have seen, will be a super-state based upon the European
area of advanced industry. The Germany of 1933 and of
now is the nuclear first stage in the development of that
super-state.

2^37

XVI

THE FUTURE OF
THE UNITED STATES

During the past year or more the doctrine of
“ isolationism ” has been swinging out of public favour
in the United States, and the isolationist politicians have
become almost a laughing-stock when they are not
denounced as Fifth Columnists. As so often happens,
however, sentiment has been changing for the wrong
reasons.

The usual argument is conducted over what might be
called military isolationism, over the problem whether the
United States can be successfully invaded by a foreign power.
So far cis the military dispute goes, the isolationists are in all
probability correct. It is not a question of a few sporadic
bombing or submarine raids, or even brief armed forays into
a few sections of the country — any foreign nation with enough
nerve could accomplish these. But the definite conquest of
continental United States by a foreign armed force is excluded
for the discernible future. The oceans remain adequate
barriers : whoever began to have doubts should have had
them quieted by witnessing what trouble twenty miles of
Channel caused the most powerful military machine in the
history of the world.

Nor can the idea of stage-by-stage conquest, from bases
first established in South America, be taken any more
seriously. Suppose a section of a foreign army did occupy
a base in Brazil, for example. It could be inconvenient,
true enough. However, a modern army doesn’t fi^t
with coifee beans and tropical plants. The only areas
which can supply the needs of a modem army are the

238

FUTURE OF THE UNITED STATES

three central areas of advanced industry, in Europe,
Asia, and the United States. The managers are indeed
skilful, but they are not magicians enough to turn Brazil
into a rival area of advanced industry in a month or a year
or a decade.

The fundamental problem of isolationism is hardly touched
on by either side in the public dispute. This is the question
not of military but of social isolationism. In connection with
the social problem, most of the anti-isolationists share the
opinions of their isolationist opponents : and both are one
hundred per cent wrong. From a military standpoint, the
continental United States remains, by and large, isolated
from any serious threat from the rest of the world. From a
social standpoint, the United States is linked unbreakably
with all the rest of the modern world. Its ability to keep
going depends upon its relations to the rest of the world.
The same general social forces are at work in the United
States as in the rest of the world. Geographical isolation and
the incomparable material advantages which the United
States has had in the past delay slightly the development of
these social forces ; but they are operating here as surely as
everywhere else.

If we review what has been happening in the United States
during the past ten or fifteen years, we find the same long-
term factors that we have noticed in the case of the other
great powers : the factors, namely, that are involved in the
dissolution of capitalist society and the growth of the managerial
structure of society. The United States, certainly, has not
escaped mass unemployment nor permanent agricultural
depression nor colossally growing debt nor idle capital fund
nor the inability to utilize technological possibilities. If the
reduction in the area of private enterprise in the total economy
is as yet behind that in Russia and Germany, the tendency
and direction arc no less unmistakable. As in other nations,
the reduction is twofold in character : an ever-greater per-
centage of enterprise is conducted outright by the state, and
to an ever-firmer extent the rest of enterprise is subject to
.state controls.

THE MANAGERIAL REVOLUTION

In the United States, very conspicuously, the great private
capitalists have been withdrawing from direct contact with
production, travelling from direct supervision of the instru-
ments of production to finance to occasional directors’ meetings
to almost complete economic retirement. By this course,
they give up, more and more, the de facto control of the
instruments of production, upon which social rule in
the end rests. Corr datively, more and more of the con-
trol over production, both‘ within the arena of private
enterprise and in the state, goes into the hands of the
managers.

In the United States, as plainly as everywhere else, the
capitalist ideologies lose their power to move the masses.
And in the United States the political-structural changes
proceed in managerial directions with most evident and rapid
speed.

This is not all. Already in the United States, the tendency
away from capitalism and toward managerial society has
received a specific native ideological and institutional expres-
sion. This expression, suited to an earlier stage in the
process than that reached in Russia or Germany, is the

New Deal,” which we have surveyed in some of its
ideological aspects.

We must be careful not to identify the New Deal and New
Dealism with Franklin Roosevelt and his acts. Roosevelt is
a brilliant and demagogic popular politician, who did not in
the least create, but merely rides when it fits his purposes,
the New Deal. The New Deal sprang from the inner structural
drives of modern society, the forces that are operating to end
capitalism and begin a new type of social organization, the
same forces which at later stages and under different local
circumstances produced the revolutions in Russia and Germany.
The firmest representatives of the New Deal arc not Roosevelt
or the other conspicuous New Deal politicians,” but the
younger group of administrator, experts, technicians, bureau-
crats who have been finding places throughout the state
apparatus : not merely those who specialize in political
tedmique, in writing up laws with concealed jokers/* in

240

FUTURE OF THE UNITED STATES

handing Roosevelt a dramatic new idea, but also those who are
doing the actual running of the extending government enter-
prises : in short, managers. These men include some of the
clearest-headed of all managers to be found in any country.
They are confident and aggressive. Though many of them
have some background in Marxism, they have no faith
in the masses of such a sort as to lead them to believe
in the ideal of a free, classless society. At the same
time they are, sometimes openly, scornful of capitalists
and capitalist ideas. They are ready to work with
anyone and are not so squeamish as to insist that their
words should coincide with their actions and aims. They
believe that they can run things, and they like to run
things.

It is important to insist that Roosevelt is not the New Deal
in order to understand unambiguously that the direction repre-
sented by the New Deal is in no way dependent upon Roosevelt.
In the general development, his presence or absence does not
make io% difference.

With the advent of the New Deal, the rate of those changes,
to which we have so often referred and some of which I have
just listed, quickened. State intervention really got going.
The percentage of the national income accounted for by
direct governmental enterprises doubled in five years. A
substantial percentage of the population became directly or
indirectly dependent upon the state for livelihood. State
controls of a hundred kinds extended throughout the economy.
Agriculture became wholly dependent upon state subsidy and
control. Export and import regulations increased, moving
toward the monopoly state control of foreign trade character-
istic of the managerial state. Private control over capital
funds was curtailed by acts governing the issuance of and
trading in securities, and the structure of holding companies.
Money left its free ” metallic base to become managed
currency under the direction of the state. In utter dis-
regard of capitalist-conceived budgetary principles, the state
permitted itself annual deficits of billions of dollars and used
the national debt as an instrument of managerial social policy.

241

THE MANAGERIAL REVOLUTION

Tax bills were designed to secure social and political ends,
rather than income. The state, through various agencies,
became by far the greatest banking establishment. In general,
measure after measure curtailed capitalist private property
rights and thereby weakened the relative social power of the
capitalists. In the United States the same shift occurred
which had begun earlier on a world scale. The expansion of
capitalist relations in the total economy was replaced by a
continuous and growing contraction. The percentage of the
economy subject to capitalist relations, whether measured in
terras of outright ownership and operation or of degree
of control, began to decrease at an ever more rapid rate.

The managers, in the governmental apparatus and in private
enterprise, flourished while the capitalists lamented among
themselves about “ that man.” Congress, with occasional
petty rebellions, sank lower and lower as sovereignty shifted
from the parliament toward the bureaus and agencies. One
after another, the executive bureaus took into their hands
the attributes and functions of sovereignty ; the bureaus
became the de facto “ lawmakers.” By 1940, it was plain that
Congress no longer possessed even the war-making power, the
crux of sovereignty. The Constitutional provision could not
stand against the structural changes in modern society and in
the nature of modem war : the decisions about war and
peace had left the control of the parliament. Time after
time this last fact was flung publicly in the face of Congress —
by the holdup of the Bremen^ the freezing of foreign balances
in accordance with policies never submitted to Congress,
the dispatch of confidential personal emissaries in the
place of regular diplomatic officials, the release of
military supplies and secrets to belligerent powers, out-
standingly by the executive trade of destroyers for naval
bases and by the provisions of the lend-lcase ** plan
(and by all that these two acts implied). The parliament
had so far lost even its confidence that it did not dare
protest.

The New Deal is not Stalinism and not Nazism. It is not
even a direct American analogue of them, for the New Deal is

242

FUTURE OF THE UNITED STATES

far more primitive with respect to managerial development,
and capitalism is not yet over in the United States. But no
candid observer, friend or enemy of the New Deal, can deny
that in terms of economic, social, political, ideological changes
from traditional capitalism, the New Deal moves in the same
direction as Stalinism and Nazism. The New Deal is a phase
of the transition from capitalism to managerial society.

There has been a mystery about the New Deal which has
often puzzled and dismayed old-fashioned liberals, like Oswald
Garrison Villard, who have on the whole enthusiastically
supported it. The New Deal, as against the “ Tories,” the
Republicans and the “ right wing ” of the Democratic party,
has certainly seemed to be the “ liberal,” the “ progressive ”
side. Nevertheless, on a number of important and sympto-
matic issues, it was the Tories and Republicans who were lined
up against the New Deal in defence of what was historically
without doubt the “ liberal ” point of view. Such was the
relationship, for example, in connection with the Supreme
Court “ packing ” proposal, where the New Deal position
was unquestionably directed against liberal and democratic
institutions. So also in the case of the original executive
reorganization plan, which was a heavy blow against parlia-
mentary democracy ; and again in connection with the
attitude of New Dealers like Ickes and Roosevelt himself
toward the press, or the \^ole question of a third term. So,
indeed, in the case of many other of the New Deal measures,
if their true significance had been realized. On these issues,
it was the Republicans and Tories who were, apparently,
defending liberty. Many of the Villard type of liberal found
themselves compelled to desert for the moment the New Deal
standard, and to line up with the Tories.

How is this mystery, this paradox, to be explained ? It is
usually dismissed without much thought. The New Deal
“ attempts to encroach on liberty ” are held to be well-meant
but dangerous mistakes. The Tory defence of liberty is
passed off as mere sham and camouflage. However, mistakes
and dbams and paradoxes of this sort do not happen in serious
);)ditics.

243

THE MANAGERIAL REVOLUTION

Here, also, it is the job of a correct theory to get rid of
mysteries ; and from the point of view of the theory of the
managerial revolution the paradoxes of the New Deal easily
dissolve. The fact of the matter is that the New Deal’s
liberalism and progressivism are not liberalism and pro-
gressivism in the historical meaning of these terms ; not, that
is to say, capitalist liberalism and progressivism. Its pro-
gressivism, if we wish to call it that, consists of the steps it takes
toward managerial society. Some of these steps have a sur-
face resemblance to those traditionally advocated by capitalist
liberalism. It was through this surface resemblance that the
New Deal was able to take the genuine liberals, who are
perpetually confused about the meaning of politics, into
camp. But many of the New Deal steps are just the contrary
of capitalist liberalism ; and the historical direction of the
New Deal as a whole runs entirely counter to the ideas and
aims of liberalism. Some of the older generation of liberals,
who are more principled and less adaptable than the younger
crowd, finally woke up to this in 1940, and, like Villard
himself, quite logically supported Willkie in the Presidential
campaign.

There is nothing sham or hypocritical about the Republican-
Tory defence of “ liberty.” The liberty in question means,
in reality, capitalist liberty. Historically and to-day the
Republican party is the authentic representative of capitalist
liberty and capitalist progressivism. These it is trying to
defend, without success, against the New Deal onslaught.
The Republican party, let us remember, was born in the
social crisis that culminated in the Civil War. It is not the
Republicans but the world that has changed.

The New Deal has simultaneously been undermining
capitalist institutions (and thus the social position of the
capitalists), making easier the rise of the managers, and
curbing the masses along lines adapted to the managerial
future. How can this be denied when one abandons high-
flown theories and looks at what has happened dtuing the
New Deal years ? Can anyone pretend tl^t during the New
Deal years the capitalists and capitalist institutions have

344

FUTURE OF THE UNITED STATES

become socially stronger, the managers (including especially
the managers in government) thrust into the background, the
masses made more enthusiastic about capitalist institutions
and ideologies ? The very contention would be absurd.

The New Deal has curbed the masses along lines adapted to
the managerial future, in the first place ideologically, by using
a propaganda that weakens confidence in the basic ideas and
slogans supporting capitalist institutions, and popularizing
ideas and slogans suited for the transition to the managerial
structure. And the New Deal has further curbed the masses
by tying the popular organizations closer and closer to the
state. This development is characteristic of the managerial
revolution in all nations. It is strikingly illustrated in the
United States by the history of the labour movement during
the New Deal period.

The older section of the mass labour movement, the A. F.
of L., has traditionally, in keeping with the ‘‘ limited state ”
principle of capitalism, been careful to preserve a large measure
of trade-union autonomy, to avoid close tie-ups with the
state apparatus, to rely on independent bargaining power just
as private capitalists strive to keep independent status on the
market. This policy was continued unchanged by the
A, F. of L. during the first five or six years of the New Deal.
The C. I. O. was a product of the New Deal period. For
several years, it was, on the one hand, favoured, almost
sponsored, by the government ; and, on the other, it moved
always toward integration with the state. Everyone knows
the intimate relations that were in force between the G. I. O.
and the National Labour Relations Board. The C. I. O.
formed the Labour’s Non-Partisan League as a political arm,
and the League was, in effect, part of the New Deal political
movement. The G, I. O, functioned prominently and openly
in the 1936 presidential campaign, and in numerous state
campaigns. More recently the New Deal government has
been restoring a more general balance by withdrawing special
favours from the G. I. O. in order to bring the labour move-
ment as a whole, including the A. F. of L., into closer relations
with the state apparatus. The A. F. of L., as a result, is

^^45

THE MANAGERIAL REVOLUTION

abandoning its traditional stand-ofF policy. Moreover, the
history of the New Deal relations with farmers’ and con-
sumers’ organizations parallels the labour movement ten-
dencies. The examples of Russia and Germany have already
taught us that the early forms of managerial society require
fusion of the popular organizations with the state. The
bureaucrats in charge of the popular mass organizations, in
fact, take their places among the managers. This tendency,
like the other managerial tendencies, is conspicuous in the
New Deal.

We must not, furthermore, neglect the significance of the
capitalist opposition to the New Deal. After the first two
years, when hardly anyone saw clearly what was happening,
the capitalists have been overwhelmingly opposed to the New
Deal. In the 1936 elections, probably three-quarters or more
of the bona fide capitalists were against Roosevelt. In 1940
the figure must have been above 90%, and there was not even
a handful of big capitalists supporting Roosevelt. Orthodox
Marxists are very hard put to it to explain this simple and
undoubted fact. They are compelled by their theory to say
that Roosevelt and the New Deal represent capitalism and the
capitalist class. Why, then, are almost all capitalists against,
apoplectically against, Roosevelt and the New Deal ? This,
apparently, must be partly hypocrisy and partly because the
capitalists “ do not understand their own interests.” What
a pitiful way out of a theoretical difficulty ! And what a
weak insult to the capitalists, who number among themselves
not a few very intelligent persons !

A correct theory cannot toss aside so revealing a piece of
evidence as the almost united capitalist opposition to Ac New
Deal. The simplest explanation which can cover tht facts is
here, as always, the best. This explanation is merely Aat Ac
capitalists oppose Ae New Deal because Aey realize, wiAout
being wholly clear about Ae full problem, Ac truA : Aat
Ac New Deal is in direction and tendency anti-capitalist.

The capitalists, unfortunately for themselves, do not, how-
ever, have any programme of Aeir own to offer in place of
Ac New Deal. They can only, as Landon did for them in

246

FUTURE OF THE UNITED STATES

1936 and Willkie in 1940, repeat the traditional capitalist
symbolic ritual of “ liberty,” “ free enterprise,” “ the American
way,” “ opportunity,” “ individual initiative.” They repeat
it sincerely, as their fathers repeated it before them. But the
ritual has lost its meaning and its mass appeal. In order to
reach any sort of audience, the capitalist spokesmen must
accompany it by protestations that they accept most of the
New Deal “ reforms ” — ^they have nothing indeed with which
to counter them — but dislike its “ methods.” Such a dislike
does not constitute a convincing programme, as Landon and
Willkie discovered.

The 1940 presidential campaign — ^which may well have been
the last regular presidential election in the history of this
country, or, at most, the next to last — was a symbolic land-
mark, a guarantee of the course of the future. The united
capitalist efforts and resources, united as never before in
United States history, could not elect their man. Those who
represented, however incompletely and primitively, the
managerial world current, carried the field easily and con-
fidently. It was amusing to read the complaints of the
hysterical New Deal type of liberal hanger-on that the Willkie
backers were “ evading the Hatch Act,” spending $20,000,000
or $30,000,000 on the campaign and using the services of the
“ biggest advertising agencies.” They forgot, however, that
the New Dealers had at their disposal every day more money
than the largest sum they estimated for the entire Republican
campaign ; that they had all the other resources, direct and
indirect, of the mighty state power ; and that the New Deal
propagandists were modelling their techniques on the methods
of the European managerial politicians, not relying on the
outworn rules for selling soap or perfume. The Willkie backers,
in truth, as Willkie’s own conduct on election night so eloquently
witnessed, never knew what hit them. They did not under-
stand what it meant to be up against, not a country squire
firam Dutchess County, but the rising tide of a world social
revolution.

* ♦ * , * *

847

THE MANAGERIAL REVOLUTION

The beginning of the second world war, the first formative
war of managerial society, found the United States unprepared
to fill the role which opened up for her in the new historical era.
Everyone knows that the United States was not adequately
prepared in a military sense. Many are beginning to suspect,
what is much more important, that the United States is not
socially prepared, does not have a social structure able to cope
with the tasks of the future. Wars, however, have the general
habit of speeding up the rate of social change. When society
is, as at present, already in a process of major transition — that
is, in a period when the rate of social change is unusually
rapid — the effect of war is especially dynamic. That this is
the case with the second world war, no one will deny.

The natural perspective which confronts the United States
follows from the world political problem that we have dis-
cussed. Within its own continental boundaries, the United
States includes one of the three central areas of advanced
industry. The United States thus constitutes naturally the
nucleus of one of the great super-states of the future. From
her continental base, the United States is called on to make a
bid for maximum world power as against the super-states to
be based on the other two central areas. For her to try to
make this bid is hardly a matter of choice, since survival in the
coming world system can only be accomplished by the expan-
sive attempt. For the United States to try to draw back into
a national shell bounded by the forty-eight states would be
fairly rapid political suicide. Suicides are committed by
nations as well as by individuals. But there is not the slightest
reason to suppose that the United States will accept suicide.
On the contrary, it is sure that she will make her bid.

The general problem for the United States is very much the
same as Germany’s, only on the whole considerably easier.
First, there is the consolidation of the main strategic base.
In Europe this consolidation meant smashing the Continental
political system. In the Americas, most of the base is already
included within the boundaries of the United States* Con-
solidation therefore reduces itself primarily to internal measures,
to strengthening internal “ unity ** and co-ordinated efficiency.

248

FUTURE OF THE UNITED STATES

Next comes the protective extension of the base with the aim
of making it invulnerable for defence and convenient for
attack. This, in current terms, is the policy of “ modified
hemisphere defence,” to draw a ring around all of North
America and northern South America. The second stage is
already well advanced. It was prepared for by the series of
Pan-American conferences and agreements and by what is pro-
pagandistically referred to as the “ Good Neighbour Policy.”
It has gone forward through such measures as the establish-
ment of air lines throughout Latin America, the visits of war-
ships and war planes, the projection of the Pan-American
Highway, the strengthening of the Panama Canal, reciprocal
military agreements with Latin-American nations, the defence
alliance with Canada which in effect subordinates Canada’s
sovereignty to the United States, and the deal with Britain
which secured outlying bases in the Atlantic. Naturally, this
stage will not stop with these moves. It will issue in a situation
comparable to what Hitler aims at in most of Europe : the
de facto elimination of independent sovereignty in all nations
and colonies of the area except the United States, and thus
the creation of a single interrelated territory so far as de facto
political sovereignty goes. There is every reason to suppose
that this stage will be successfully accomplished.

The third and grandiose stage, which, though it has already
begun for the United States, will extend many decades into
the future, and for which the first two stages are preparation,
is the bid for the maximum of world power against the claims
of the European and Asiatic central areas. The United States
is forced to begin this third stage before the preparatory first
two stages are finished.

The first great plan in the third stage is for the United States
to become what might be called the “ receiver ” for the dis-
integrating British Empire. (We are not, of course, interested
in the propagandistic terms that are used in current references
to this action*) The attempt is to swing the orientation of
the Empire from its historical dependence on Europe to
dependence on and subordination to the American central
jurea« Success in the case of the English Dominion (Canada)

249

TH£ MANAGERIAL REVOLUTION

and possessions located in the Americas is already at hand —
in fact, Canada really swung into the United States orbit
some years ago. There are obstacles to the plan, however,
in the case of the more distant parts of the Empire. Many of
these fall more readily into the orbit of the Asiatic or European
areas than into the American ; and it is to be therefore
doubted that the plan can be wholly carried through.

We see here, again, why Hitler has always preferred a deal
with England to conquering her completely. A deal with
England gives the best legal as well as military groundwork for
keeping the vast Empire territories attached to the European
central area, whereas in the process of the annihilation of
England, the Empire tends to swing toward the American
area.

Along with the United States’ receivership plan for the
British Empire go still broader aims in connection with the
rest of South America, the Far East (including conspicuously
the Far Eastern colonies of formerly sovereign European
states) and in fact the whole world. The struggle which has
begun is the world struggle of the super-states of the future.
This struggle, as I have remarked, is bound to be incon-
clusive. No one of the three central areas is able to conquer
definitely the other central areas, and therefore no one state
power can in fact rule the world. This will not, however,
prevent the struggle from taking place. And, besides, there
will be periodically decided just how much of the world will
fall within the spheres of each of the super-states. I have
outlined in Chapters XII and XV the general forms of the
wars and conflicts that may be expected.

This, then, is the course set for the United States. It, too,
is not a question of personal speculation : the United States
has already embarked on this course, and is plainly going to
persist in it with whatever deviations and interruptions.
Roosevelt’s speeches, from the time of ihe Dayton, Ohio,
“ hemisphere talk ” during the campaign, express the perspec-
tive more and. more openly. This perspective for the United
States follows firom the general perspective of world politics
in managerial society. But the perspective is fer mtmagmd

850

FUTURE OF THE UNITED STATES

society, presupposing managerial social organization for the
chief participants. And the United States is not yet a
managerial state.

The capitalist social structure cannot hold its own in these
scheduled conflicts. This we have seen in many ways, but we
may review here certain evidences that are even now clear in
relation to the United States and the specific problems which
the United States faces.

In the first place, capitalism cannot hold its own eco-
nomically against managerial economic organization. This
has been shown, in fact and by analysis, in connection with
South America. The capitalist institutions, still prevailing
in the United States, have proved themselves unable to handle
the economic side of the South American problem. It is not
profitable^ in the capitalist sense, to integrate South America
into a super-state dominated by the United States ; and yet
extension into such a super-state is a necessity for the political
survival of the United States. Almost all able economists in
this country are lately agreed that capitalist institutions,
“ private initiative,” will not hold up against the controlled
managerial methods in an economic battle over South America.
The South American problem is no different from the problem
of the rest of the world.

Nor can arming (not merely the building of armaments,
but their co-ordinated use) be adequately done under capitalist
institutions. Adequate arming— that is, adequate, for the
tasks imposed, against rival arming — also is no longer profitable
to capitalism. This, as I have noted, has been shown by
the examples of France and England, who were not able to
arm adequately — though they certainly realized what was
at stake — under their capitalist institutions. It is being dis-
covered by the United States ddring the course of the experi-
ences of the second world war. The armament programme
just doesn’t seem to get going properly.

It would be very superficial to attribute the trouble to the
evil will of capitalists who own the armament industries or to
trade unions or to the incompetence of oflBcials. It is not
ill will or incompetence, though these also, as under any

25*

R

THE MANAGERIAL REVOLUTION

system, arc aften present, but the institutions of capitalism
that make the obstacles — owners who must have an adequate
profit in order to expand and keep going, autonomous and
independent trade unions with the right to strike, price
changes under the influence of market conditions, capital
funds at the disposal of private individuals, a governmental
structure too limited in scope and too little co-ordinated.
In the debates over “ excess profits ” and “ amortization
allowances,” over plans to “ conscript ” industry and to
establish compulsory priorities and price controls, over the
propriety of strikes in armament plants, there spreads the
growing shadow of this fundamental problem ; nor will that
shadow be withdrawn. This does not mean that capitalist
institutions are not still capable of very considerable arma-
ment efforts ; enough, no doubt, to forestall for some years
the resolution of the problem in the United States. But the
efforts will prove, before so very long and perhaps most
bitterly for many, not enough.

Third, capitalist institutions and the ideologies affiliated
with them are no longer capable of arousing adequately the
popular morale, a by no means secondary part of the task
for the future. This I have already commented on, and dis-
cussed in relation to the failure of voluntary military enlist-
ment, as well as to the passivity with which conscription is
accepted. It is further stressed by the inability of capitalism,
in this case United States capitalism, to get rid of the Fifth
Column. The Fifth Column can be got rid of, not by
any conceivable number of G-men, but only when the
ideologies and methods that call it into being can be
challenged by at least equally effective ideolc^es and
methods.

From these considerations we may conclude once again
that the United States will shift more and more, and more
and more rapidly, toward the managerial social structure.
This is not a startling conclusion. It does not mean any shift
from' the historical direction of the past decade, but, on the
contrary, merely a deepening of the tendency already estab-
lished. Thus the initial world struggle, begun c^nly in

252

FUTURE OF THE UNITED STATES

September, 1939, will gradually merge into the world conflict
among the rival sections of the managers.

It might seem that certain events of the past year argue
against this analysis. Roosevelt, it might be argued, has been
granting “ concessions ” to capitalists in order to help “ national
defence along. Granted that the New Deal is managerial
in tendency, do not these concessions show that the effect
of the war is to bring a reversal back toward the strengthening
of capitalism ?

It is true that some concessions to capitalists have been
made — though we should remember that there have been
other concession periods in the New Deal history (as there
have been in Nazi history), and that, in any case, Roosevelt
is not identical with the New Deal. It may even be true
that these might bring about a temporary relative strengthen-
ing of the social position of the capitalists and capitalist institu-
tions, though Willkie, as spokesman for the capitalists, scarcely
seemed to think so. But the further effects of the war pre-
parations, the wars, and the between-war interludes that are
coming guarantee that the concessions will prove illusory.
Modern total war is not profitable for capitalism, and conse-
quently capitalism cannot adequately fight it. This was really
proved by the first world war, which was unprofitable, as has
often been shown, for the victors as well as for the vanquished.
This was not the case with the earlier wars of capitalism,
which were almost always profitable for the victors and often
for the losers as well. Indeed, the unprofitableness of the
first world war was an important demonstration of the fact
that it was the last great war of capitalism.

As a matter of fact, there are cruel catches in any con-
cessions which might seem to have been made to the capitalists.
Perhaps, though the stock market is not very optimistic, they
permit larger profits. We have seen, however, that de facto
control over the instruments of production, rather than a
privileged share in the national income, is decisive in the
long run. The constant effect of the war measures, even of
the apparent concessions, is to decrease the control exercised
by private capitalist owners. The weight of control is shifted

253

THE MANAGERIAL REVOLUTION

toward the managers, in and out of government, along with
their bureaucratic and military colleagues. In the first world
war, armament production was run as a private preserve of
the capitalists. As the Senate munitions inquiries proved,
billions of dollars were siphoned off into capitalist pockets
through the autonomous War Industries Board, headed by
the finance capitahst, Bernard Baruch. Even the name of
the new agency — the Office of Production Management — is
symptomatic. It is headed by William Knudsen, who, though
closely affiliated through his past with the capitalists and no
doubt in his own mind a firm believer in capitalism, is never-
theless by training and experience a production man, a
manager. Moreover, the OPM, unlike the War Resources
Board, is finnly anchored within the state apparatus.

In all probability the unions will be prohibited, either by
statute or agreement, from strikes in armament industries—
which can be interpreted to mean nearly all important in-
dustries. Though such a prohibition will doubtless be wel-
comed at first by the private capitalists, it will not mean
that the unions will be left to the unchecked mercy of the
capitalists. The managers will have other plans for the
control of the unions, as of the industries. In general, the con-
cessions will in the end turn to dust in the capitalist mouths.
The further development of the war preparations, the economic
world conflicts, and the wars, will prove in practice that
success in none of them can be won along capitalist lines.
When that proof is plain enough, the country wffi go over to
definite managerial structure.

It will be seen that I take herein for granted that the
United States will be in the war. This, also, is not much of
a speculation. By earlier standards of the meaning of war
and peace, the United States has been in the second world
war ^most from its start. As I write, the United States armed
forces are not being killed ; but for this as yet the strategy
of the present war has no need. Factories making belligerent
airplanes in New York or New Jersey or California are as
much a part of the total war machine as those located in
Coventry- or Southampton or Manchester. Warshi}» and

254

FUTURE OF THE UNITED STATES

planes in preventive patrol of the western Atlantic or the
Far East are part of the warring fleets, even if the immediate
circumstances of the war dictate that they shall not be fired on.

The line between war and peace in the contemporary world
is not so formally drawn as it used to be. From the point of
view of historical development, and in terms of social effects
upon this as upon other nations, the United States is in the
second world war. Indeed, by the end of 1940 it was correct
to say that the United States had become one of the two
major belligerent powers in the world conflict. Even though
England was carrying the brunt of one side of the actual
fighting, it was clear that her role had become, as it was
bound to become, secondary to that of the United States.
If this stage of war continues without an interruption through
a peace arrangement between England and Germany, it is
pltiin that the United States will join the war in all respects
during 1941. An interruption, however, would change only
the time schedule, for the world political problems remain.
In that case, formal war participated in by the United States,
the opening stages of the battle of the three central areas,
will begin in a comparatively few years.

* * * * *

The pattern of the United States way to managerial society
is, from all evidence so far, closer to the German than to the
Russian pattern. This is to be expected from the closer
similarity in general social circumstances : the United States,
like Germany, has an extensive and advanced industry and
technology, a culture which though probably not as advanced
as the German is far above the Russian, and a large, able,
and trained group of managers already existing.

There arc, however, as is also to be expected, differences
between the United States pattern and the German. For
one thing, the solution of the first two parts of the managerial
problem— the reduction of the capitalists to impotence and
the curbing of the masses along managerial lines— has up
to now developed more gradually in this country than in

255

THE MANAGERIAL REVOLUTION

Germany. This lower pace has been no doubt due to the
more favoured position, from almost every point of view,
that the United States had enjoyed under the capitalist world
system. But a far more important difference lies in the
relation of the war to the decisive crisis that swings the nations
from capitalist dissolution definitely into the managerial road
— the crisis which the United States has not yet reached.
Germany made the break six years before the second world
war began. It is in the midst of war itself that the United
States crisis develops. The United States way is the war
way. In order to take its place in the new era of world
politics now opening up, in the new type of economic conflict
and the wars that are an integral part of the new era, the
United States will be compelled to go over to the managerial
structure. Thus the United States must meet all three parts
of the managerial problem — the reduction of the capitalists,
the curbing of the masses, and the competition with the other
sections of the managers — more or less at once, instead of by
the rather clearly separated stages that we noticed in the
Russian and German ways.

Already, in the case of the United States, just as with the
rest of the world, we may conclude that the direction toward
managerial society is irreversible. Capitalism, in the United
States as elsewhere, fights a losing battle. Every apparent
victory the capitalists win leaves them only weaker, for their
base is being constantly sapped. The next few years, war
and near-war years, will thrust them always further back.
A peaceful interlude, during which they might hope to regain
their full rights and privileges, will find too much changed in
the major institutions and relations of society to permit a
return.

Even if a return were institutionally possible, neither the
managers nor the masses would permit it. Why should the
managers and their bureaucratic military allies accept a re-
turn that would thrust them back into the servant quarters ?
They arc servants who are learning to speak with the voice
of the master. And, as in Germany, a return would present
itself to the minds of the masses as the road back toward

256

FUTURE OF THE UNITED STATES

everlasting mass unemployment and bread lines, social mean-
inglessness, a lack of ideological perspectives. Therefore, how-
ever harsh the lot of the masses, they will choose to solve their
problem by further advance along the managerial road, not
by a return. If the governmental regime then existing
attempts to return, that regime will be overthrown, and
another, welded to the managerial structure, will be put in
its place.

There remains a further and, humanly, most important
question. In the case of the United States, will a revolutionary
mass movement, and the terror and purges that accompany
such movements, be part of the managerial development as
they have been (and will be) in Russia and Germany ?
Historical precedent and an analysis of present conditions
do not make possible an assured answer. There have been
instances of social revolutions carried through without revolu-
tionary mass movements and without a major terror ; in
particular, when these revolutions, as will be the case for the
United States in the present world revolution, are socially
similar to what has already been carried through, with the
aid of mass movements and terror, in other localities. Some
sort of mass movement is undoubtedly required in the United
States. The experience of the New Deal suggests, however,
that it may be possible to create such a movement officially,
we might say — ^from above, from the government itself ; in
fact, such a movement already exists, at least in primitive
form, within the New Deal forces. The development of such
a movement need not be at all the same as that of those move-
ments which grow up apart from and opposed to the govern-
ment and “ law and order,*’ Given such a course, and
granted reasonable good will and sufficient clarity about what
is happening in the world, it is even possible that the United
States could accomplish the transition to managerial society
in a comparatively democratic fashion.

Nevertheless, though this now seems possible, it is the less
likely variant. There is not much clarity, and there is so
much for social groups to lose, and to win. The capitalists
arc to lose all, or nearly all. The masses, during the course

257

THE MANAGERIAL REVOLUTION

of the transition, will lose the hopes of a free, classless society
which the circumstances of revolutionary transition will stimu-
late in them. There will be much struggle for places in the
new ruling class. Revolutionary mass movements, terror,
purges, are usual phases of a major social transition. Societies
do not seem willing merely to change the old. At some stage
they seem to wish to smash it, at least symbolically. It is
more likely than not that these more strenuous features, also,
will be included in the United States way.

258

XVII

OBJECTIONS

I

JL AM WELL AWARE THAT THE CONCLUSIONS REACHED IN

this book will be displeasing to most of those who read it.
Nevertheless, denunciation of the book, or of its author, will
have no bearing upon the truth of these conclusions, if they
are true. Denunciation may persuade people not to believe
what the book says. But truth is a function, not of belief,
but of evidence.

The aim of propaganda is to persuade people to accept
certain ideas or feelings or attitudes. The aim of science is
to discover the truth about the world. The propagandistic
aim is usually best served by being thoroughly one-sided, by
presenting only what is favourable to your case and suppressing
all that might weaken it and bolster your opponent. As
Hitler remarks in one of his shrewd chapters on propaganda,
you don’t sell your brand of soap by pointing out that a rival
brand is really just as good.

In the case of any hypothesis which is under consideration,
science, in contrast to propaganda, is always anxious to
present all the evidence, for and against. The scientific aim
is just as well served by proving a hypothesis false as by j^roving
it true. This book, though faulty in execution, is scientific
in its aim. I have no personal wish to prove the theory of
the managerial revolution true. On the contrary, my personal
interests, material as well as moral, and my hopes are in
conflict with the conclusions of this theory.

If there is evidence against the theory of the managerial
revolution, I wish to take it into account as fully as the evidence
for it. I have, during the course of the book, tried to include
a discussion of negative evidence in appropriate contexts. I

259

s

THE MANAGERIAL REVOLUTION

wish to return to it in this final chapter. I do not pretend
to be at all complete in listing possible objections, since that
would be outside my present scope. In this book I have
had to restrict myself primarily to the formulation of the
theory of the managerial revolution ; a comparison between
it and rival theories ; a general outline of its meaning and
content and the evidence for it ; and a somewhat more
specific application of it to the problems of world politics, of
Russia, Germany, and the United States.

There is a peculiar difficulty in giving due weight to the
evidence against the theory. This arises from the fact that,
so far as I know, the theory of the managerial revolution has
never up to now been systematically formulated. Conse-
quently, no one has yet had an opportunity to disprove it,
if it can be disproved. I have been compelled to assemble
negative evidence as well as positive. However, there have
been presented, though somewhat roughly and incompletely,
many of the elements of the theory as well as recognizably
similar theories using the term ‘‘ bureaucratic ’’ rather than

managerial ” revolution. And these theories of a bureau-
cratic revolution have been argued against. I shall make
further reference to the arguments in what follows.

In estimating the weight of the evidence against the theory
of the managerial revolution, we must keep in mind an obvious
principle of scientific method. To disprove the theory, it is
not enough to show that it is not ioo% certain, that difficulties
confront it, and certain evidence seems to be against it. It
must be further shown that it is less certain than alternative
theories covering the same subject-matter, that there are in
its case more difficulties, more negative evidence than in the
case of at least some one alternate theory. No theory about
what actually happens and will happen is ever “ certain.”
It can never, whether in the field of physics or history or
anything else, be anything except more or less probable on
the evidence. If a given theory is more probable than any
alternative theories on the same subject, then that is all that
can be required ; and, from a scientific point of view, we
must accept it. The theory of the separate creation of

960

OBJECTIONS

biological species is not made scientifically acceptable by show-
ing, as it can be shown, that there are serious difficulties
with the biological theory of evolution. The theory of evolu-
tion is more probable than the theory of specific creation in
spite of the difficulties. The theory of the managerial revolu-
tion will not be disproved merely by showing, as it can be
shown, that difficulties confront it ; it will have also to
be shown that fewer difficulties confront some alternative
hypothesis — in particular, either the theory of the permanence
of capitalism or the theory of the proletarian socialist revolu-
tion, for variants of one or another of these include all the
alternatives which have, so far, been seriously put forward.

J|C jK * 3|e

It is possible to object to the formulation of the theory of
the managerial revolution. Objections of this kind are to
be expected on opposite grounds : from some, that it is too
vague ; from others, that it is too precise.

The theory is too vaguely formulated, it may be said,
because it doesn’t include any exact “ mathematical laws,”
any precise dates, any rules for calculating stock prices next
Tuesday. Now there is no doubt that the theory is vague,
in this sense, compared to the theories in the physical sciences.
This vagueness, however, is a comment not so much on this
theory as on the relatively undeveloped stage at which socio-
logical science to-day rests in general. With the exception
of a very few limited ranges of their subject-matter, the
sociological and historical sciences have not yet reached even
th^ l^y^l that th<? physical sciences held in ancient Greece.

When we find elaborate mathematical laws in books about
the general development of history and societies, we can be
sure either that the authors are fooling themselves or that
the alleged laws are false or empty. As Aristotle long ago
wisely mentioned, it is a mark not of intelligence, but of
ignorance and pedantry to expect more accuracy in a field
than the field is capable of.

The theory of the managerial revolution is vague, but not
too vague to be significant. .The test for the empirical

261

THE MANAGERIAL REVOLUTION

significance of a statement is whether that statement and the
deductions that may be drawn from it make any difference,
any observable difference, as compared with other statements
dealing with the same subject-matter and the deductions that
may be drawn from tliem. Most metaphysical and religious
statements, such as “ all things are ideas ” or “ God created
the world,” are not empirically significant because it doesn’t
make any observable difference whether or not they are true.
Most general theories of world history, like casual theories
holding that destiny or God or economic relations or what
not are ‘‘ responsible ” for everything that happens historically,
are not significant, because, again, it doesn’t make any
observable difference whether or not they are true. But
Boyle’s Law of Gases is significant, because observable differ-
ences in the behaviour of gases under varying pressures and
volumes may be expected logically to follow from its truth
or falsity.

If we compare the theory of the managerial revolution
with the theory of the permanence of capitalism or the theory
of the socialist revolution, then it is plain that all three theories
are significant : that is, it is plain that it makes an enormous
amount of observable difference which of the three is true.
The world that we will shortly live in will be a very observably
different place if the theory of the managerial revolution is
true rather than the others. Altogether different expectations
and predictions, in most spheres of social life, follow from the
three different theories.

The theory of the managerial revolution is, indeed, more
orecise than this book suggests. Here it was necessary^

because of the novelty and complexity of the subject, to
present what is little more than a general outline. And
month-by-month predictions do not have much point any-
way in a book, where many months intervene between the
writing and publication. It is, however, possible and easy
to make specific probable predictions on the basis of the
theory, more specific than the many predictions I have
included, and to test the theory further with their help.

Objections on the ground that the theory is too precise

262

OBJECTIONS

will probably be more frequent than those based on its
vagueness). Many people seem to be offended by definite
statements about what is going to happen in human history ;
it is felt to be a kind of sacrilege. They say : Nobody really
knows what is going to happen. They prefer to think that
it is “ all accident ” or “ God’s will.” This attitude is partly
a reflection of the primitivcncss of sociological sciences to
which I have referred. It is true that these sciences are not
very helpful guides. But the attitude has an even deeper
root : people, for the most part, do not want to know what
is going to happen ; and, above all, the ruling groups in
society find it advantageous to keep knowledge about what
is going to happen in society from developing and extending.

If politicians say before election that they are not going
to lead the country into war and then go to war after election,
it is obviously more advantageous to them to have people
regard this as an unfortunate accident, or punishment, than
to have it realized, when the pre-election promise is given,
that, in spite of the words, going into war is a predictable
consequence of what is being done. Naturally a capitalist
does not want it believed that mass unemployment is a pre-
dictable consequence of the maintenance of capitalist institu-
tions under present-day circumstances. Unemployment, also,
is to be considered an accident ” or ‘‘ exception.” Nor
do the managerial ideologues wish to have it publicly pointed
out in advance that their proposals will bring, not peace and
plenty and freedom, but a new form of class rule and
exploitation.

Nevertheless, the general methods of the social sciences
can be no different from those of the other sciences, and the
same type of results can be obtained. We try to arrange
our data in an orderly manner ; and, on the basis of past
experience, we make probable predictions about the future.
If we don’t yet know society as we know the solar system,
we yet do know, if we want to, something about it ; and,
as in the other sciences, we can know at least some things,
with some degree of probability, before they happen. Because
it lets us know what is probably going to happen before it

263

THE MANAGERIAL REVOLUTION

happens — that, after all, is why scientific knowledge is worth
having.

I conclude, therefore, that the formulation of the theory of
the managerial revolution is adequate, I recognize, however,
that the formulation can be greatly improved and clarified,
and I hope that others more skilled than I in these matters
will so improve and clarify it.

The more important objections are those that may be made
not to the formulation of the theory but to what it says, to
its content. Two of these have been advanced in criticisms
of the similar theory of the bureaucratic revolution. This
latter theory, in so far as it has been stated, agrees with the
theory presented by this book in holding that it is false that
capitalism is going to continue and false that socialism (in
the sense of a free, classless, international society) is going
to replace capitalism ; the theory agrees also with much of
our account of the structural features of the new society now
developing, especially in the case of the economic institutions
— the differences in the account of the political structure,
which are considerable, need not concern us. But the theory
of the bureaucratic revolution maintains that the ruling
social class in the new society, the class with power and
privilege, will be, exclusively, the bureaucrats : that is,
the politicians in the narrower sense, those who carry out
the “ non-productive ” functions of political administration,
diplomacy, policing, and fighting.

A sharp criticism has been made of this view on the
ground that the bureaucrats are not capable of constituting
themselves an effective and stable ruling class in society.
Social rule, it is argued, depends on de facto control of the
instruments of production — the means whereby society lives ;
and such control can be held only by some group which plays
a direct and integral role in production. The bureaucrats
have no such role. They can achieve a temporary sem-
blance of dominance in society only under exceptional and
brief circumstances of social confusion, when they are able
to utilize for their own purposes the conflicts among other
classes in society wWch do have a direct role in production.

264

OBJECTIONS

The bureaucrats it might be said, balance for a while on
a kind of social tight-rope between the major social classes.
In such a way the bureaucracy under Napoleon III of France
gained a brief independence and dominance by playing French
capitalists and peasants and workers off against each other.
So, in our own day, have the bureaucracies in Russia and
Germany been able to do, for a brief while : in the former
case, balancing between the Russian workers and peasants,
in the latter, between the German capitalists and workers.
But, so the criticism runs, such a state of affairs cannot last,
'fhe weight will have to fall, sooner rather than later, to one
of the great social classes directly functioning in social pro-
duction. When it does, the bureaucracy will have to swing
with it and lose all measure of social independence.

This criticism, upon examination, may be seen to be weak
even in relation to the theory of the bureaucratic revolution,
and without any validity in relation to the theory of the
managerial revolution.

The criticism is largely based upon a widespread misunder-
standing of contemporary “ bureaucracies ” which amounts
to a confusion between them and the bureaucracies of a few
generations ago. In the old days, it could be plausibly
stated, as it was, that the functions of the old political bureau-
crats were “ nonproductive ” (Veblen included them in the
“ leisure class ”) — though the view even then was only partly
true, since production as men actually cany it on includes
diplomacy and war and political administration and policing.
The state, then, as we have so often insisted, was strictly limited
in its sphere of activities ; production was, for the over-
whelming part, carried forward outside the state sphere.
Under such circumstances, the bureaucracy could not have
been, and was not, the ruling social class, in spite of super-
ficial appearances. The ruling class was the capitalists, who
controlled production. The bureaucracy, by and large,
represented the capitalists and, on the political field, acted
in their interests.

The contemporary bureaucracies, above all in those states
which have moved furthest toward the new social structure,

265

THE MANAGERIAL REVOLUTION

are functionally a quite different group from the old bureau-
cracies. The new bureaucrats are not merely concerned in
production ; they are directing, in all nations already, the
biggest enterprises ; and, through various types of control,
they have their hands in almost all enterprises. Moreover,
as we saw, even the bureaucrats still primarily occupied with
‘‘ government ’’ in the narrower sense are applying to their
tasks the techniques and methods taken over from modern
industry and science and invention. It is a ridiculous carica-
ture to think of the modern bureaucrat — as many still think
of him — in terms of the fussy, briefcase-carrying incompetent
whom we read about in nineteenth-century novels. This
caricature lies back of the criticism that the bureaucracy is
incapable of becoming a ruling class.

When we correct the “ bureaucratic theory ” by the
‘‘ managerial theory’s ” demonstration that it is not the
bureaucracy, conceived in any narrow sense, but the managing
group which is becoming the ruling class in society, the
criticism falls wholly. The managers are certainly concerned
directly in production : indeed, the development of modern
industry places them in the key positions of production even
before the transition to managerial society takes place. Before
the managerial structure is consolidated, the managers func-
tion throughout enterprise, both private and governmental.
With the consolidation of the managerial structure, which
includes the state monopoly of all important enterprise, the
position of the managers is assured. To a large extent, as
we saw, the managers and the bureaucrats fuse into a single
class with a united interest. Far from being incapable of
constituting a ruling class, the managers, by the very condi-
tions of modern technology and contemporary institutional
evolution, would have a hard time avoiding rule. Just as
the struggle of the capitalists against the feudal lords was
largely won before the open stages of the struggle began,
so too is the struggle of the managers already fairly well
decided in the initial period of the transition, before men
realize explicitly that the struggle has started.

It is perhaps worth remarking that there is an interesting

266

OBJECTIONS

piece of psychological evidence for the assured social position
of the managers. The managers — these administrators, ex-
perts, directing engineers, production executives, propaganda
specialists, technocrats — are the only social group among
almost all of whose members we find an attitude of self-
confidence. Bankers, capitalist owners, liberal politicians,
workers, farmers, shopkeepers — all these display, in public
and private, doubts and fears and worries and gloom. But
no one who comes into contact with managers will fail to
have noticed a very considerable assurance in their whole
bearings. They know they are indispensable in modern
society. Whether or not they have thought it out, they
grasp the fact that they have nothing to fear from the
immense social changes speeding forward over the whole
world. When they begin to think, they get ready to welcome
those changes, and often to help them along.

A second criticism which has been directed, chiefly by
Marxists, against the bureaucratic theory,” runs as follows :
The solution ” of the major problems confronting modern
society requires ” the elimination of capitalist private
property in the instruments of production. This the bureau-
crats (for which we may read “ managers ”) are able to
carry out. But elimination of private property is not enough.
If society is not to be destroyed, national states must also be
eliminated, and world political unity established. This the
bureaucrats (managers) are unable to do. On the contrary,
they gain power with the help of a nationalism even more
extreme than capitalist nationalism, and thus lay the basis
for an unending series of wars.

It may be noticed that this criticism, if valid, would not
in the least, as the Marxists imagine, go to show that socialism
is coming. It would only indicate that complete chaos, the
destruction of all organized social life, is coming.

However, the criticism is not valid. In the first place, the
nationalist ideologies of the managers are misunderstood.
Their nationalism is a device for social consolidation, the
effectiveness of which has been well proved by experience.
It is, however, a device of great flexibility, and one which

267

THE MANAGERIAL REVOLUTION

can be modified as need arises. It is, as Germany and Russia
and Japan have certainly proved, not at all incompatible
with the breaking down of existing national boundaries.
Germany, consolidating initially to the tune of “ the German
fatherland ” and “ the German folk,’’ easily extends this to
“ Europe and Europeans ” or to “ the Aryan race ” or to
workers ” or anything else that proves convenient. Extreme
Japanese nationalism dovetails neatly with a pan-Eastem
ideology and practice. The present rise of extreme United
States nationalism is not exclusive : it fits itself in readily
with the “ hemisphere policy,” and it will have no trouble
getting outside of the hemisphere.

Second, the managers can ‘‘ solve ” the problem of capitalist
nationalism, are, in fact, busily engaged in solving it. Capitalist
nationalism means a comparatively large number of indepen-
dent, sovereign national states. The managerial structure is
moving to break this political system for ever, and to substi-
tute for it a small number of great sovereign areas : the
“ super-states,” as I have called them.

It is true that this managerial “ solution ” is not according
to the Marxist formula, and that it will not yield a unified
single world state. It is true also that it will lay the basis
for many wars, just as wars are part of the process of arriving
at it. But there is no one or nothing, except ideal formulas,
that “ requires ” the ‘‘ logical solution ” of one world state
and no more war. History is not a theorem of geometry or
a game of chess, both of which proceed according to ideal
rules that wc impose upon them. There is no evidence that
men adopt those historical solutions which seem “ logical ”
to a calm mind of good will ; and there is plenty of evidence
that men fight wars and will continue to fight them. The
capitalist-nationalist political system has, during the past
generation, become unworkable and is on its way out. The
new world political system based on a small number of
super-states will still leave problems — more, perhaps, than a
unified single world-state ; but it will be enough of a
solution ” for society to keep going. Nor is there any
sufficient reason to believe that these problems of the

268

O B JE CTIONS

managerial world system, including the managerial wars, will
“ destroy civilization.” It is almost inconceivable even what
it could mean for civilization — that is, some form of com-
plexly organized society — to be literally destroyed. Once
again : what is being destroyed is our civilization, not
civilization.

A different kind of criticism of the theory of the managerial
revolution has, and will, run as follows : You conclude that
society is changing to a new structure of class rule, exploita-
tion, wars, and, for some time at least, tyranny. But you
neglect what most people want, what they feel and hope for,
what they will do. Why should they put up witJti such a
perspective ? If they want peace and plenty and freedom,
they will sweep aside your managers and managerial institu-
tions and anything and everyone else that stand in their way.

I would be the last to deny the historical importance of
what people want and feel and hope for. I have not the
slightest sympathy with any theory of historical “ mechanism ”
or “ determinism ” which pretends that human wishes and
thoughts and wills have nothing to do with the historical
process : it is, it seems to me, perfectly obvious that human
wishes and decisions and hopes arc an integral causal part
of the historical process.

But a correct historical theory also takes into account what
people are probably going to wish and hope and decide.
Human wishes and decisions are themselves part of the world
of actual events ; and, as with other events, on tlie basis of
the experience of them in the past we infer what they will
be like in the future. When, on the basis of experience, I
know a man’s character, I can have a fairly good idea, in
advance, of what he will probably say and want and do under
varying circumstances ; even more fully in the case of social
groups can we know with some probability beforehand what
they will do, granted such and such a situation. Everyone
knows just about what a football crowd at a big game will
eat, drink, feel, shout, and hope ; and grounds-keepers and
hot-dog salesmen plan successfully on the basis of such fore-
knowledge.

269

THE MANAGERIAL REVOLUTION

^most people did indeed want peace, plenty, and freedom
from all forms of exploitation and tyranny ; and if (what is
just as necessary, though less often remarked) they also knew
the means whereby these were to be got ; and if they were
willing and courageous and strong and intelligent and self-
sacrificing enough to bring about those means to those ends ;
then no doubt the world would achieve a society organized in
such a way as to realize peace, plenty, and freedom. But
there is not any evidence at all from past or present history
that all three (and all three would be required) of these
conditions will be met. On the contrary, the evidence of
the analogies from the past and the circumstances of the
present is that people will act and wish and hope and decide
in ways that will aid in the managerial revolution, in the
carrying through of the social transition which will end in
the consolidation of managerial society.

This last criticism, about the human factor,’’ reduces to
a more general fallacy : When we deal with the problem^ of
history we usually misread them in terms of what we hope
instead of understanding them as the evidence dictates. And
I suspect that most objections to the theory of the managerial
revolution will be found to rest on hopes, not on evidence.

Clarity about what is happening in the world has been
blocked in recent times by unexamined acceptance of one or
the other of the two assumptions which we have so often
noticed : the very naive assumption that capitalism is the
‘Only possible form of human social organization because it
is somehow a part of eternal human nature ; or the more
common assumption that in modern times capitalism and
-socialism are the only possible alternative forms of social
organization. Not only do these assumptions prevent us from
knowing what the future is to bring ; they compel us, more
and more during the past two decades, to distort and twist
our understanding of what is happening before our eyes.

The second of these assumptions, merely by being stated,
disposes of the first. The theory of the managerial revolu-
tion, as soon as it is formulated, disposes of both so far as
assumption goes. Instead of assumptions, we are left with

270

OBJECTIONS

three theories, hypotheses about the future : that capitalism
will continue ; that capitalism will change into socialism ;
that capitalism will change into managerial society. The
problem is, then, which of these three theories is the most
probable on the evidence ? That will be the theory which
we must believe, if we wish to be rational, quite apart from
what, if anything, we may decide to do about it. On the
evidence so far available, I see little doubt that the theory
of the managerial revolution is the most probable.

There will be those who will find in this a renewed proof
of what they will call the essential tragedy of the human
situation. But I do not see witli what meaning the human
situation as a whole can be called tragic, or comic. Tragedy
and comedy occur only within the human situation. There
is no background against which to judge the human situation
as a whole. It is merely what it happens to be.

271

DATE OF ISSUE

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